There are many avenues to build credit. One of them is to get a secured Visa credit card. You have options when it comes to these cards, and they can all be a great credit-building tool if you have limited or bad credit, since they’re backed by collateral. If you’re looking at credit unions for secured Visa, you will find what are called share-secured credit cards. How does a share-secured credit card work? Let’s explore.
What Is a Share-Secured Credit Card?
A share-secured Visa is a credit card offered by a credit union that is backed by collateral, typically funds in your savings account. You deposit an amount of your choosing, within a certain range as determined by the credit union, which then becomes the credit limit on the card. Your deposit is then locked in a non-interest-bearing savings account. You can then use the card to make everyday purchases. With consistent usage and timely payment of balances, your credit score can improve over time.
These differ from secured Visa credit cards. While they both require a deposit that becomes your credit limit, secured Visa cards require an upfront deposit. It also differs from unsecured credit cards, which offer revolving credit without collateral. However, these typically have stricter qualification requirements.
How to Get a Share-Secured Credit Card
These cards are usually easier to qualify for since you don’t need ideal credit. To get a share-secured credit card, you must first understand the credit union’s requirements, including the minimum and maximum deposit range. It’s also important to know whether your funds are deposited into a savings account and whether they earn interest or dividends.
You could also see if you have the option to increase your limit by adding more funds, though this can vary by issuer. With all this information in tow, you can confidently apply for a new card.
Costs and Important Terms to Understand
It will also help you plan better if you know the terms and conditions of the card, including:
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Annual percentage rate (APR)
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Annual fees and other potential charges
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Late payment and returned payment fees
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Policies around missed payments and deposit forfeiture
Best Practices for Using a Share-Secured Credit Card
To get the most out of your card, make sure you pay off your balance every month on time, and try to keep balances low relative to your credit limit. This can help avoid extra interest charges and late fees.
Additionally, keep track of your credit report over time to check for score growth and accurate reporting.
Is a Share-Secured Credit Card Right for You?
If you need to build or rebuild credit, a secured credit card can be a good option. Before you apply, make sure to review your current financial standing to see what you can reasonably afford. And, ensure that you’re using the card responsibly. It can be a good stepping stone toward getting credit cards with bigger rewards, credit limits, and cardholder benefits.
Cyprus Credit Union’s Share-Secured Visa credit card is a great way to build or rebuild your credit. Enjoy competitive rates, no annual fees, no transaction or balance transfer fees, and no minimum finance charges. Take control of your credit, apply for a new card today!
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