Posts Tagged ‘apply for a secured credit card’

If you have a bad credit history or no credit history at all, a secured credit card is perhaps the best card for you.

What is a Secured Credit Card?

A secured credit card, commonly misspelled as secure credit card (without the ‘d’), is a type of credit card that requires the card holder to deposit a certain amount, typically 100 to 200 percent of the total credit desired. This type of credit card is often used by those who have poor credit record and want to rebuild it. It’s used by new cardholders to create a good credit history the first time. Most credit card companies offer this type of card for such purpose.

This type of credit card is generally offered by Visa and MasterCard. Another popular card that belongs to this type is the Orchard Bank secured credit card. You can check on each detail by visiting their official websites.

Why Secure?

The term secure or secured is taken from the credit card provider’s perspective and not from the cardholder’s. A secured credit card would need a deposit or collateral that the bank will temporarily ‘own’ as a guarantee for any loaned or borrowed money. Given this characteristic, banks and credit card companies issue a secured credit card especially to those who don’t have any credit profile or those that have bad credit standing. This gives them the opportunity to lessen the risk of not having to recoup their capital when lending money.

The security deposit left in the hands of the bank or credit card companies would usually equal or exceed the credit limit imposed on the credit card. This is the method they use to lessen payment delinquencies from cardholders. This is because a cardholder would feel like losing something when the balance is not paid on time.

Regular payment is still required from the cardholder if there’s any outstanding credit card balance. In most cases, the security deposit will be left untouched for a missed one or two payment. The moment the cardholder defaults, the card issuer would then recover all the cost and fees from the deposit.

Note that the features of secured credit card offered may vary. Some may have fees or other policies that are different from others. That is why when applying for a secured credit card, you have to understand the terms and conditions completely to make sure you get the best secured credit card that fits your needs.

More on Secure Credit Card

Completely different from the ones discussed above, a secure credit card can also be perceived from a transaction perspective. Cardholders always seek the best security whenever using their credit card online or in person. Generally having brand or name attached to the card, would assure you of having better credit card security. This is because most known brand would invest in tightening their cards’ security feature and provide services such as on-call support for lost/stolen credit cards, and the like. Online merchants also partner with different security companies to ensure that every transaction happening on their site is secured.

Generally, credit cards can be offered to a person who is at least 18 years of age, who pays his or her taxes and can provide proof of income and billing.

Most banks almost have the same requirements for a standard credit card. Applying for a Visa or Mastercard credit card can be done directly through their website or through their bank partners. If you would like to know the detailed information, you would need to enquire specifically to the credit card company.

Basic information needed when applying for credit cards are provided below. Take note however that the overview provided below are some basic information that may or may not be the same requirements with regards to your favored credit card. If you are planning to apply for a business credit card or multiple credit cards, it is highly recommended that you consult your local bank or credit card company.

1. Citizenship. A basic requirement for a credit card application is that you must hold citizenship or at least a permanent residency in the country you wish to apply. This is to make sure, from the bank’s perspective, that the person applying will be able to pay the bills consequently.
2. Proof of Income. In most cases, the applicant must be a taxpayer or pretty much have a source of income. If not, how will you be able to pay the credit card bills? If the applicant is self-employed or is running his or her own business, they should be able to provide the most recent tax information as proof that they have a source of income and is capable of paying any borrowed money. For employed applicants, this is typically supported with a certificate of employment from your company that states your monthly/annual remuneration. A valid copy of your pay slip can also be added as supporting document.
3. Assets and Liabilities. It will greatly help the application if the applicant can provide details of any proof of assets, savings or investments. This will influence how much will be the credit limit granted to you by the bank. Sometimes the bank will ask if you have any pending balances or any form of liabilities such as against another credit card. The applicant should have full documentation of this in order to prove that they are capable of paying the subsequent bills.

How long does the process usually take?

Credit card processing actually depends on a lot of factors. One of which is the type of card applied for. There are those that offer instant approval especially for those with very low credit limit. Shorter processing days are also needed for some student credit cards. Secured credit card application would require more time to process.

If you have all the required documents at hand, the bank will be giving you an application form. The form will normally take a few minutes to fill out. Submit that to the bank and they should be informing you of the turn around time for their response. Typically, it would take about 3-5 days for them to complete the background check. If it takes longer than their estimated time frame you should get in touch with your bank and enquire of the status.

If all goes well your credit card should be delivered to you at your billing address or can be picked up from the bank where you applied. Regardless of the method of application, be it online or personally through bank, it would usually take days to process everything.