Having a credit card offers great convenience. Not to mention attractive perks like discounts and rebates on petrol, dining out, online shopping, air miles and bread-and-butter items like groceries and public transport. Having gotten used to such benefits, it would seem almost foreign to not own one.
Why you may need a secured credit card
Some of the reasons why people no longer qualify for unsecured credit cards (i.e. credit cards as we know it) include:
- Not being employed – it could be due to retrenchment, deciding to stay home with the kids, the transition period towards viable self-employment.
- Having an annual income less than $30k
- Being retired – not having an annual income of at least $15,000 or assets exceeding $750k or a guarantor.
- A bad credit history – colourful codes on your credit report.
If you fall into any of the above categories, fret not. It ain’t the end of the world as far as the little plastic is concerned.
How do you apply for a secured credit card?
In place of proof of income, you will have to pledge a fixed deposit of a minimum $10,000 with the bank you are applying for a card with. The credit limit will mirror the amount of fixed deposit you place with the bank (i.e. if you pledge $10,000, you will have a $10,000 credit limit and if you pledge $50,000, you will have a $50,000 credit limit).
Do note however, that you will no longer be able to withdraw your fixed deposit as long as you own this secured credit card. The only way to access your fixed deposit is to terminate your secured credit card and inform your bank to release the pledge on your fixed deposit. The processing time can easily take 30 days or longer.
How having a secured credit card helps you
Having a secured credit card is a great way to rebuild your credit score while the 12-month cycle in your credit report resets. This is of course assuming that your bad credit history is due to laziness in paying your credit card bills on time instead of being short on funds.
Also, you can also start enjoying various perks and rebates for a wide plethora of daily necessities and leisure experiences. And the freedom of going around cashless.
To find out more about the best credit cards for different perks, visit Moneysmart today.
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Tags: Credit Cards