When you file bankruptcy, you will no longer have access to the credit cards you may have once used to make purchases. While this is a good thing, simply because you will not have the ability to buy things you cannot afford, it can also be frustrating when you need a credit card to use for a purchase. Getting a secured credit card is something you may want to look into after bankruptcy. Secured credit cards are not hard to get, and they offer many benefits. Here are three things you should know about secured credit cards.
How to Get One
The first step is getting a secured credit card, and you may want to compare several options before choosing one. Most lenders that offer secured cards have offers that are similar, and one requirement is that you must make a cash deposit into an account with that lender. This deposit may have to be $200, $500, or another amount, and this amount is typically equal to the credit line the lender offers.
For example, if you put a $500 deposit on a secured credit card, the lender is likely to give you a $500 credit line. If you want a higher credit line, you may have to make a larger deposit.
If you would like to get a secured credit card, you can apply for one through a lender of your choice. Because these credit lines are tied to cash accounts, there is very little risk for the lender. Bankruptcy will leave your credit score low, but this will not matter when applying for a secured credit card.
Learn How to Use It
There are several reasons people choose to get secured credit cards after bankruptcy, including:
- It offers a way to pay for things that require a credit card—There are times when using a credit card is the only way you can pay for something. Having a secured credit card will allow you to pay for things in these situations.
- It will help you build your credit—One of the main reasons to consider getting a secured credit card is to help you rebuild your credit. If you get one, you should use it every month and pay the full balance when you receive your statement. This will help you build your credit, because each month the lender will report the information to the credit bureaus. This will slowly rebuild your credit history, which could help you have better credit faster.
- It offers a risk-free way to buy with credit—Using a secured credit card is good compared to a regular card, because your purchases are backed up with your own cash. This will help you avoid getting into debt you cannot repay.
With a secured card, you should avoid going over the credit line limit. There may be times when you need to purchase something, but the purchase would cause your balance to go over the limits. You will have to learn how to use the card wisely and responsibly. If you go over the limits, the lender might charge you fees.
How to Go From Secured to Unsecured
After you get a secured credit card, you may eventually want your cash deposit back. If you use your card wisely and find other ways to rebuild your credit, this will not be impossible. Many lenders will review accounts periodically for this purpose. If your credit score is high enough during this review, the lender might agree to return your cash deposit. At this point, your secured credit card would convert to an unsecured card.
Getting a secured card is not hard to do and can help in many ways. If you would like to learn other ways to rebuild your credit after bankruptcy, talk to your bankruptcy lawyer.