If you are looking for an efficient alternative to credit cards in order to control your expenses and improve your credit score, you should get a secured credit card. Learn how to use it efficiently here.
If you have to rebuild your credit score and aren't able to apply for a credit card or a loan, you should look for other options. One of the best alternatives is to get a secured credit card. Here's a simple guide to learning what a credit card is and how it can help you improve your personal finances.
What's a secured credit card
First things first: Let's define what a secured credit card is! Getting this type of card requires a deposit as a form of collateral. This will be a backup in case you can't pay back the balance.
You will then have a credit that matches your deposit amount. Then, you can use your card just like a regular credit card.
How to use a credit card responsibly
As a secured credit card can help you rebuild your credit score, you should learn how to use it efficiently and responsibly. There are mainly three things you need to do to use wisely your card and avoid future problems.
- Always make the minimum payment: Secured credit cards can help you rebuild your score as long as you don't miss the minimum payment. If you don't make this payment, the credit bureaus will know.
- Check the fees: As you do with regular credit cards, make sure that you know all the fees you might be charged. There are annual fees, late fees, returned payment fees and cash advance fees. Make your research!
- Pay off your balance: If you can´t pay off your balance fully each month, try at least to carry a low balance. This will keep your credit score stable.