Those who are unable to manage their finances will surely experience a rejection from a few credit card providers. This will cause some embarrassment but this is inevitable if you are still in the process of building your credit score. If you want to avoid such a shameful predicament then secured credit cards are the answer to your needs. You can also use this option to slowly rebuild your credit rating for future purposes like applying for a loan or for another credit card.
In truth, secured credit cards are offered since many families are experiencing hard times due to the rising standard of living and disposable income shrinking. This is the reason why many people have very low credit scores. Still the need to have access to credit remains so the banks are offering a win-win solution where they could provide credit while reducing their risks. With secured credit cards, banks require the account holders to make a deposit equivalent to the credit limit set by the bank. For instance, in order to have $200 credit limit, you need to make a deposit in the same amount. So in case you fail to make your payments, the banks have it covered.
There are actually some banks that are willing to take the risk and offer unsecured credit cards to people with poor credit history. They minimize the risk by charging an exceptionally high interest rate, which could be as much as 30%. The best alternative for you is still a secured one, which is often offered by banks with established names offering great services and with a wider coverage. The banks get their earnings from transaction fees, monthly or annual maintenance fees in exchange for the cool features enjoyed by the credit card holder.
It is not always that banks are the exploiters or bad guys though in some cases, these suspicions may have a sound basis. Consumers still have not forgotten the exorbitant fees charged by some of the big banks in Australia. The Federal Government has put a stop to this but consumers are still a bit wary. It is a proven fact that we need banks to manage our financial affairs and without access to credit, it would be pretty hard for us to meet our financial obligations. With secured credit cards, people can have the needed credit as they work harder to rebuild not only their credit score but also their lives. Banks can be our allies if we make sure to find the product that suits our needs as well as spending habits. It can be a mutually beneficial arrangement if we also make sure to pay our dues on time. We can get great deals if we are consistent and diligent in meeting our obligations.