Secured credit cards are a type of credit card that requires a security deposit before the account is opened. The security deposit acts as collateral for the credit card issuer and is usually equal to the credit limit on the card. Secured credit cards are designed for individuals who may have difficulty obtaining a traditional credit card due to a lack of credit history or a low credit score. The fees associated with secured credit cards may include an annual fee, a processing fee, and a late payment fee. Some secured credit cards may also charge a fee for exceeding the credit limit or for making balance transfers. It is important to carefully review the fees associated with a secured credit card before applying, to ensure that the card is a good fit for your financial needs.
Some common fees that you may see with secured credit cards:
- Annual fee: Some secured credit cards charge an annual fee to cover the cost of maintaining the account. This fee is typically a fixed amount that is charged once per year.
- Monthly maintenance fee: Some secured credit cards charge a monthly maintenance fee to cover the cost of maintaining the account. This fee is typically a small, fixed amount that is charged every month.
- Late payment fee: If you make a payment on your secured credit card after the due date, you may be charged a late payment fee. This fee is typically a percentage of the unpaid balance, and it increases if you have multiple late payments.
- Returned payment fee: If a payment that you make on your secured credit card is returned by your bank for any reason (e.g., insufficient funds), you may be charged a returned payment fee. This fee is typically a fixed amount.
- Balance transfer fee: Some secured credit cards charge a fee for transferring a balance from another credit card to the secured card. This fee is typically a percentage of the balance being transferred.
- Foreign transaction fee: If you use your secured credit card to make a purchase in a foreign currency or while you are traveling outside of the United States, you may be charged a foreign transaction fee. This fee is typically a percentage of the transaction amount.
- Credit limit increase fee: If you request an increase to your credit limit on your secured credit card, you may be charged a credit limit increase fee. This fee is typically a fixed amount.
Bottom line:
The fees associated with secured credit cards can vary significantly depending on the issuer and the specific terms of the card. Some common fees that may be associated with secured credit cards include an annual fee, a processing fee, and a late payment fee. It is important to carefully review the fees associated with a secured credit card before applying, to ensure that the card is a good fit for your financial needs. It is also a good idea to compare the fees and terms of multiple secured credit cards to find the one that offers the best value. In general, the key to minimizing fees with a secured credit card is to pay on time and avoid exceeding your credit limit or making balance transfers.