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Secured vs. Unsecured Credit Cards: Building Credit After Bankruptcy

Post by Christopher Migliaccio

Most Americans are no strangers to holding at least a small amount of credit card debt. In fact, TransUnion, one of the largest credit bureaus in the United States, reported that the average debt per borrower in the beginning of 2013 hovered at $4,878, a significant sum for many.

For those who have been bankrupt and who are still trying to improve their FICO scores, a high line of credit could be either a blessing or a curse. For anyone looking to gain the trust of financial institutions across the country, deciding between secured and unsecured credit cards is often the first step.

Secured vs. Unsecured Credit Cards 

An unsecured credit card is one with which most Americans are familiar: It is a card that offers you access to a specific amount of money with the understanding that you will repay a portion of borrowed money monthly. This is generally only available to those with a strong history of repaying what they borrow.

For those who have a low credit score, whether because of debt delinquency or bankruptcy, a secured credit card might be the only option. A secured card, per its name, is a card that is directly tied to a portion of money that you deposit with your financial institution.

For example, if you apply for a secured credit card that extends a credit line of $500, you may be required to leave that amount with the bank upon applying for the card; in the event that you cannot repay, the bank simply will use your deposit to cover your debt.

Other cards let users deposit smaller amounts to achieve greater credit lines, and the specifics of each card will vary, depending on the issuer. It is also important to note that secured credit cards also come with annual fees.

Why You Should Apply for a Secured Credit Card 

Most financial advisors, when addressing the secured vs. unsecured credit card debate with a bankrupted client, recommend the secured line of credit. The secured credit card may seem similar to a debit card on the surface. For both, you are required to have a certain amount deposited into your account in order to make purchases.

There are a few important distinctions between the two, however. First, there are certain transactions, as well as certain organizations, that will only allow credit cards to be used, not debit cards.

Debit cards may be connected directly to your checking account, but they don’t build your credit score. With a secured credit card, although you may have only a small line of credit, each on-time payment you make helps build your credit, eventually allowing you to obtain a card with no strings attached.

Help Build Your Credit After Bankruptcy 

If you have gone through the process of declaring bankruptcy, then you understand how difficult it can be to qualify for a line of credit in order to get back on your feet. If you are struggling with your financial history and wondering about the benefits of secured vs. unsecured credit cards, consider applying for a secured credit card. Some people who have declared bankruptcy even request help from their bankruptcy attorneys to learn about their options regarding debt relief.

The attorneys at Warren & Migliaccio can help you examine your options and answer any questions you may have about secured and unsecured credit cards, building your credit score and getting back on track to financial stability. In fact, we have a free eBook available via our contact page, What You Need to Know About Bankruptcy.

Article Category: Bankruptcy

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Practice Areas

  • Plano & Richardson, Texas – Bankruptcy Lawyers
  • Chapter 7 Bankruptcy Attorney
  • Chapter 13 Bankruptcy Lawyer
  • Child Custody Attorneys
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  • Divorce
  • Family Law
  • Spousal Support
  • Personal Injury

Recent Posts

  • Bankruptcy: 4 Basic Steps
  • How Mediation Works
  • 5 Signs That Bankruptcy May Be Warranted
  • Divorcing an Alcoholic Spouse in Dallas, Texas
  • Medical Debt Bankruptcy in 2013: A Gloomy Perspective

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Richardson/Plano Office

3600 Shire Blvd #205
Richardson, Texas 75082

(972) 600-2680

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10440 N Central Expy #800
Dallas Texas 75231

(214) 556-1038

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Warren & Migliaccio, L.L.P.
Warren & Migliaccio, L.L.P.
4.7
Angela MyLife
Angela MyLife
15:02 07 Jun 17
We worked with Chris and other staff. Chris from the start really worked with us as we were unsure what to do next and what was the best option for us. Chris spent a great deal of time with me on the phone, over email as well as meeting with my husband and I in his office. It can be scary to have the unknowns as we did and he really helped. When dealing with things you just don't know about you have to find someone you can trust to lean on and let them handle it; you can't be an expert on everything. The staff were so helpful and there was never a question on what we needed to get them or needed to do during the process. We were prepared 100% for what was to come and even months after the staff was quick to follow up to make sure that we did not have any questions or have anyone contacting us. They even helped figure out the 'what next' and 'where to go from here' that comes up. I would recommend them to anyone finding themselves facing financial struggle and trying to decide what to do. They give a free consultation over the phone or in the office; worth the call to find out your options.
Emma Radcliff
Emma Radcliff
21:41 02 Jul 16
I recommend Warren and Migliaccio to anyone who like myself, had no idea of what to do next. They were open and honest to me about my bankruptcy. They took time and explained the whole process to me beforehand. I was treated I'm sure, as their more prominent clients even though I'm a single senior with a limited income. They helped me maintain my dignity and I'm sure my sanity too.
Richard Parker
Richard Parker
23:23 27 Jun 16
I worked with Chris Migliaccio to resolve a debt matter. He is a professional and knowledgeable attorney that was easy to work with. He has excellent negotiation skills. I highly recommend him.
Jodi Wiethorn
Jodi Wiethorn
14:54 15 Oct 15
I would strongly recommend anyone needing a family law attorney use this office. The staff is so friendly, helpful, and knowledgeable. Gary Warren and Ryan Bauerle were the ones that helped me with a very rough child custody case and they were absolutely amazing. They are very nice guys but they will fight for you!!! I am truly happy that I used them for the case, I could not have asked for a better attorney! Ryan helped me and my husband so much and explained everything so well to us! I can't thank them enough for all they did for me and my family! So anyone please take my advice, if you need a family law attorney give Ryan a call!!!
Sandy Thomas
Sandy Thomas
01:17 03 Feb 15
Everyone in this attorney's office was wonderful! We had one matter that we needed assistance with last year, but they were not able to assist us with it, however Christopher Migliaccio was kind enough to provide us with a list of attorneys who would be able to help. Over the last couple of weeks, we decided to update our wills and powers of attorney and it could not have been any easier to do. They made it so we only had to make one trip to their office to take care of everything. If we need anything else, I would be most happy to do business with them again!
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Warren and Migliaccio, LLP
Warren and Migliaccio, LLP
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Angela H.
Angela H.
2015-07-13 09:17:49
They work with the little man. Mrs. Doss is very kind and understanding. She gives her all. Mr. Chris loves helping others and does his job to ensure...
Maria R.
Maria R.
2014-06-12 09:05:00
I searched for a local attorney on Google to prepare some Estate Planning documents and I came across Warren and Migliaccio, LLP. I called the number...
Lauren A.
Lauren A.
2014-07-28 14:15:41
Ryan Bauerle, and everyone at Warren & Migliaccio are top tier attorneys. Ryan is expedient, professional, courteous, and when the situation warrants, a...
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