In past American civilization, credit was not a big issue. There are actually records of major business contracts and loans without a signature, a simple firm handshake was enough to close any deal. Through the last 40 years, credit has become increasingly important to the average American. These days, a firm handshake just doesn’t quite cut it. Even though credit is so extremely important, the fine art of building your score is not mastered by too many consumers. I would like to go over just one piece of the credit building puzzle and that is using credit cards as a fast track to great credit scores.
The credit card also a fairly new piece of the average American lifestyle, is a piece of plastic that can be used to take a last minute loan for any item from groceries to auto insurance. The versitility of the newly found credit card is endless. However, for new borrowers it can prove to be a bit difficult to get your paws on one of these mysterious pieces of plastic. There is however one type of credit card that is designed not only to use as a last minute loan but also to generate great credit scores. This credit card is most widely refered to as the secured credit card and is offered by almost any major issuer from Bank of America to Discover credit cards.
Secured credit cards are a great tool for many things. Using secured credit cards can prove to be very benificial in building great credit history. Although there are great upsides to using secured credit cards, there are some aspects about them that may prove to be a little concerning when you first open the account. When opening a regular credit card account, there is no up front cost, this differs from secured credit cards. Secured credit cards are called secured credit cards because of the security deposit required to open the account. When opening one of these credit card accounts you are required to place a security deposit usually somewhere between $250.00 and $500.00. This security deposit then becomes your credit line. So with that said, you are essentially paying interest to borrow your own money. I know this can be disturbing however, it will work out for the best as long as you use the account properly. Usually after about 12 to 18 months, the security deposit you placed to open the account will be refunded to you and at that point, the secured credit card becomes an unsecured credit card and you are now borrowing the bank’s money.
With that said, I want to make sure you know the proper way to utilize secured credit cards or any other credit card for that matter. There are a few general rules of thumb to go by when using credit cards and here they are:
Rule #1 - Always pay your bills on time or early - Even though the due date is the 21st, that does not mean you can wait untill the 21st to put the check in the mail, if you do, that payment will arrive late! As a matter of fact, I always advise that you send payments no later than 2 weeks early. This will allow time for mailing delays and for the credit card company to process the payment.
Rule #2 - Never over use a credit card - This concept is simple always stay below 50% of your total credit line. If your credit limit is $500.00 never carry a balance of more than $250.00 on that account. This will show creditors great money management abilities on your end and help to build and maintain a great credit score.
For more information on this topic or any other financial topic, feel free to contact us:
By phone - (561) 355-0069
By email - Support@JemCreditCards.com
On the web - www.JemCreditCards.com
Copyright © 2008 Credit Cards: from Choosing Best Credit Card to Application
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