- Secured credit cards differ from the standard, unsecured variety in that they require a cash deposit. Your cash deposit constitutes all, or a portion of, your available credit line, depending on the credit provider. Secured accounts are a lower risk for the credit card company because, in the event you do not pay the bill, the company keeps your initial deposit -- limiting its financial losses.
Because credit card companies market secured accounts to more high-risk individuals, these accounts frequently carry high fees and higher interest rates than unsecured credit cards. Provided the credit card company reports your account to the credit bureaus, however, making purchases and paying your bill on time helps you build a good credit history. - Credit card companies often set up booths on college campuses, encouraging students to apply for credit card accounts. Student credit cards are often unsecured, giving students the ability to obtain credit without providing the credit card company with a deposit. Although each credit card company's requirements vary, many do not require students to possess a previous credit history before awarding them a new credit card.
Credit card companies are willing to take this risk with college students because students' parents are more likely to pay off debts they incur while they are still in school. Thus, if you are enrolled in college, it's a good time to start thinking about building a credit history with a student credit card. - Department store cards are a form of credit card, but they differ from traditional credit cards in that you can only use them at specific locations. Fortunately, department store cards typically carry lower credit requirements than universal credit cards -- making them easier for those with a limited or nonexistent credit history to obtain. While making timely payments on a department store card helps you build your credit history, watch out for high interest charges. Like secured credit cards, department store cards carry higher interest rates than standard, unsecured credit cards.
- Loved ones with good credit can help you build your credit rating by adding you to their credit card accounts as an authorized user. Authorized users are not responsible for paying the monthly bills. Because of this, your lack of a credit history does not stand in your way. In addition, the primary cardholder's account payment history appears on your credit report -- boosting your credit rating and providing you with a foundation on which to build a positive credit history.
Secured Credit Cards
Student Credit Cards
Department Store Cards
Authorized User Cards
SHARE
