Understanding Secured Credit Card Interest
Aubrey Clark
January 19, 2009
Secured credit cards are an excellent way to rebuild your credit, or build new credit. Whether you are new to the credit world and therefore have no credit score making it next to impossible to obtain a regular credit card, or whether you have poor credit, a secured credit card can be a real benefit.
There are a variety of credit card providers that offer such a service, but it certainly pays to shop around as processing fees and interest rates can vary from reasonable to excessive. Understanding secured credit card interest is one way to save a little money, and ensure you actually choose the right card for your situation.
A secured credit card will almost never let you carry a huge balance like you can on a normal credit card, and that´s okay because interest rates can be rather steep, often exceeding 22% annually. The balance you can carry is dependent on your credit card limit and the funds on deposit. Consider this.
You carry a balance of $500 with an interest rate that is 22% annually; you will pay $9.17 a month. Now consider this. If the interest rate was 10%, you would pay only $4.16 a month in interest. However, if you do not carry a balance, instead paying off your credit card statement each month, your monthly interest charge will be $0.
Be cautious of secured credit cards that offer low interest rates as part of a promotion. Many times these are the same cards that charge an exorbitant processing fee, which can work out to even more than the higher interest rates.
The Consumer Action Organization located in Washington DC actually recommends that you choose a secured credit card that does not charge a process fee at all, and many debt services recommend the same. You´ll also want to watch for the best annual fees. Some of these can be extremely high, while others are very reasonable, running around $50 a years.
Searching for a secured credit card has never been easier. After all the internet has opened up a world of services, we could not have accessed in the past. But still, you really should start with your local bank.
If you have a local bank that you deal with make an appointment with one of the reps that deal with credit card applications and speak to them about the secured credit card options they offer. You can still check online and see if there are any other cards that are offering a more competitive interest rate.
There are some excellent deals out there so don´t settle for anything that doesn´t sound like such a deal. For example, Applied Bank has a couple of different cards that they offer with very reasonable rates, while Millennium offers a low annual fee.
Applied Bank Secured Visa Gold Card offers:
9.99% Low Fixed APR - Rate Won’t Change Even If You’re Late!
Choose Your Credit Limit Up To $5,000
0 Fraud Liability
NO Credit Requirements
NO Income Requirements*See Issuer
New Millennium Bank Secured Gold MasterCard
No Credit Check
Approved Regardless of Credit History
Total Credit Limit Up To $10,000
Reports to All 3 Bureaus
Get Cash at Over 740,000 ATMs
You can see how shopping around for a secured credit card with the best interest rate and the best annual fees can save you a bundle. All those costs add up quickly, and since you never know when you might be carrying a balance, you want to find the best secured credit card interest out there.
Aubrey Clark is an Author and editor for Direct Banc, a Low Interest Secured Credit Card directory. Aubrey is a financial expert who has spent over twenty years working and training in financial markets. His current project is a secured credit card interest tutorial for people who are rebuilding their credit.
There are a variety of credit card providers that offer such a service, but it certainly pays to shop around as processing fees and interest rates can vary from reasonable to excessive. Understanding secured credit card interest is one way to save a little money, and ensure you actually choose the right card for your situation.
A secured credit card will almost never let you carry a huge balance like you can on a normal credit card, and that´s okay because interest rates can be rather steep, often exceeding 22% annually. The balance you can carry is dependent on your credit card limit and the funds on deposit. Consider this.
You carry a balance of $500 with an interest rate that is 22% annually; you will pay $9.17 a month. Now consider this. If the interest rate was 10%, you would pay only $4.16 a month in interest. However, if you do not carry a balance, instead paying off your credit card statement each month, your monthly interest charge will be $0.
Be cautious of secured credit cards that offer low interest rates as part of a promotion. Many times these are the same cards that charge an exorbitant processing fee, which can work out to even more than the higher interest rates.
The Consumer Action Organization located in Washington DC actually recommends that you choose a secured credit card that does not charge a process fee at all, and many debt services recommend the same. You´ll also want to watch for the best annual fees. Some of these can be extremely high, while others are very reasonable, running around $50 a years.
Searching for a secured credit card has never been easier. After all the internet has opened up a world of services, we could not have accessed in the past. But still, you really should start with your local bank.
If you have a local bank that you deal with make an appointment with one of the reps that deal with credit card applications and speak to them about the secured credit card options they offer. You can still check online and see if there are any other cards that are offering a more competitive interest rate.
There are some excellent deals out there so don´t settle for anything that doesn´t sound like such a deal. For example, Applied Bank has a couple of different cards that they offer with very reasonable rates, while Millennium offers a low annual fee.
Applied Bank Secured Visa Gold Card offers:
9.99% Low Fixed APR - Rate Won’t Change Even If You’re Late!
Choose Your Credit Limit Up To $5,000
0 Fraud Liability
NO Credit Requirements
NO Income Requirements*See Issuer
New Millennium Bank Secured Gold MasterCard
No Credit Check
Approved Regardless of Credit History
Total Credit Limit Up To $10,000
Reports to All 3 Bureaus
Get Cash at Over 740,000 ATMs
You can see how shopping around for a secured credit card with the best interest rate and the best annual fees can save you a bundle. All those costs add up quickly, and since you never know when you might be carrying a balance, you want to find the best secured credit card interest out there.
Aubrey Clark is an Author and editor for Direct Banc, a Low Interest Secured Credit Card directory. Aubrey is a financial expert who has spent over twenty years working and training in financial markets. His current project is a secured credit card interest tutorial for people who are rebuilding their credit.