Secured Credit Card Do's and Don'ts

July 20, 2011 - PRLog -- At times, we find ourselves lured by a particular shopping item that we want to buy, but insufficient money puts a stop to our desire. Other than that, sometimes we also get into useless debt crisis, due to silly expenditure. Credit cards where on one hand are little genies and a necessity of today's life, also are big trouble makers, especially for people who do not keep a track of their expenditures regularly. Once you run into debts owing to a particular credit card you are most likely to get another one to clear up the bills of the previous one. It gradually becomes a vicious cycle. In case you face such a situation this definitely means you are at a risk of having bad credit scoring which consequently will not allow you to get any type of credit card. It is only secured credit card that you can avail in that situation.

Secured credit card (http://www.canadabanks.net/default.aspx?article=Secured+Credit+Cards+in+Canada) is basically a card which is secured by a specific amount of credit which is usually kept in your account. The secured credit card system is almost same as just having a usual bank account, except that it is more convenient as you do not always have to worry about the bank hours or the ATM facility. Moreover, you can never run into debt as long as you use this credit card since it allows you to use that amount which you already have deposited.

This amount depends on the money in your deposit account and is usually between 50% and 100% of the total money. For instance, you have kept $4000 in your account, you can use around $2000 to $4000 dollars via your credit card. The exact credit depends on the bank issuing the card and the credit card type itself. There are several different offers provided to master of the secured credit card. The most common is the availability of a higher credit with a very low balance in account; its credit can sometimes be as high as 1,000% of the total balance.

You are required to pay the credits you use regularly for a secured credit card just like you do for an ordinary credit card. Your deposit account is only kept as collateral and only used if you fail to pay the required amount. This also is a great way for earning positive credit rating.

In addition, even if this card demands you to place your account as collateral, stay assured as the bank cannot tamper with your account anytime it wants. Regardless of the fact that you do not clear up your bills for a few months, the card issuing company will not snatch the money from your account and won't also resort to bad credit reporting but in fact will see to the closing of your account and after that will let you know that you have debt to clear up. The card issuing company normally stands by 5 to 6 months and afterwards your account will be put to a halt however by that time, you may end up having debt amount bigger than your own deposited money. This predominantly is because of the interest charges that your account bears owing to your negligence of not clearing up your monthly bills in time.

http://www.canadabanks.net/Credit-Card-Payment-Calculator...

# # #

Canadian Banks focuses on the Canadian banking industry, featuring articles about Canadian financial institutions, mortgage, credit and debt. The site also features loan, mortgage and credit calculators. http://www.canadabanks.net/