So many people think they can’t get a secured credit card because of their bad credit. The whole idea is that whenever you use a secured card for your credit you’ll be on the road to the top, right? You certainly don’t have a good credit history to apply with a secured card, but besides the collateral (like your home or auto insurance) you do have something else: an initial deposit to use as collateral. And secured cards are actually pretty easy to qualify for, and getting approved for one really isn’t hard at all.

secured card

It’s important to remember that when you’re applying for a secured card with a secured deposit, you have a due date. Your due date is important because it tells the bank (the issuers) when they’ll start to make the monthly loan payments. Usually you should be able to borrow up to about 2 months after your due date. That’s because the bank needs to be sure that you’ll be able to make at least that much money each month in the event you don’t pay them back. In most cases they’ll only require a small percentage (usually less than 10%) of that amount to be due each month, and then they’ll loan the rest of your deposit. They don’t care if you miss a payment, or even pay more than you plan – they just want to know that you’ve got the money to pay back the loan by the due date.

Now, if you know your due date, and you know how much money you need to set aside each month, you can figure out how much money you need to set aside each month in a savings account. Many secured card issuers now allow you to set up a prepaid debit card online, which you should definitely do. It doesn’t take long to set up one, and once it’s active you can use it like a regular card. The card issuer will deposit the money onto your deposit after you’ve agreed to the terms of their agreement.

You can also use this method of building credit, if you’ve already established some savings. In order to qualify for the best rates on secured credit cards, you’ll probably have to deposit as much money as possible into a savings account with a well-performing financial institution. This is a very good way to establish the sort of positive credit reputation that’ll help you later when you apply for bigger and better things. If you don’t have any savings, though, you still have a few other options.

One thing you can do is to take out an unsecured credit card, and use it every month. That’s a lot like building credit, since you’re not using any deposits. The key, however, is that you won’t build any credit history with this method. Since you’re not technically building any history with the unsecured card, you won’t have to worry about being declined by future creditors. But the lack of security will mean that you pay a higher rate of interest on the unsecured card as a result.

Another option you have is to look at prepaid debit cards, also known as MasterCards. These types of credit cards allow you to make purchases with no money directly deposited in your account. Rather, you get a pre-determined number of credits (usually less than $500) and use this to make purchases. It works pretty much the same way as a secured card, except for the fact that issuers don’t need to see any evidence of financial history or job earnings. Like secured cards, the biggest risk associated with prepaid debit cards is the possibility that issuers will deny you because you don’t meet the criteria for credit checks.

A third option is to go with a hard inquiry. Unlike a prepaid debit card, hard inquiries are actually considered a credit inquiry. This means you’ll need to build credit by having a mix of deposits (one with a high interest rate and one with a low interest rate). Because hard inquiries are more competitive, this is a very viable option for anyone looking to improve their chances of being accepted for an unsecured Mastercard.

Of course, if you’ve had trouble building credit, or haven’t had a job for several years, these traditional credit cards may not be the best option for you. After all, they do require a deposit to open up the account. You also have to be prepared to have your deposit returned to you at the end of the year. However, if you don’t mind the risk and have the discipline to follow through each month, then a traditional credit card may be a good choice for you. Just make sure that you understand all the terms and conditions before making your deposit.