A secured credit card is a relatively safe and effective tool for establishing credit after filing for bankruptcy. Like anything, there are risks and rewards associated with getting a secured credit card.
On the one hand, using a secured credit card can demonstrate responsibility to the credit bureaus. Conversely, missing just one payment can sideline efforts to rebuild credit.
Below are four tips on how to get and use a secured credit card to your advantage:
Tip #1 – Shop Around and Do Your Homework
Don’t snag the first offer that comes in the mail. Active research will help you find a secured credit card that most closely matches your needs and available financial resources.
You will be required to put down a cash deposit, so apply only for secured credit cards that fall within your available means. Also, watch out for any cards that carry hidden monthly fees or rapidly increasing interest rates. The credit card company or bank should be forthcoming about all costs associated with using the card.
Tip #2 – Make a Budget and Stick To It
Set a monthly budget before you have the secured credit card in hand. Know how much you can afford to put down as a deposit and how much you can spend using the card each month.
Tip #3 – Never Miss a Payment
The goal of getting a secured credit card is to beef up your credit score. A single late or missed payment can derail those efforts. Sticking to a monthly budget and keeping a low balance should help avoid this mistake.
Tip #4 – Plan Ahead to the Next Step
A few months of punctual payments are a good start, but it pays to plan ahead. After establishing good habits with a secured credit card, consider applying for a store credit card or even a major, unsecured credit card. Follow the same rules: budget, make timely payments, and shop around for the best deal.
Do you have questions about filing for bankruptcy in Texas? The attorneys at Warren & Migliaccio can help. Call us at 888-584-9614 or complete this online contact form.