Thursday, June 24, 2010

For years, people have relied on secured credit cards to get them through rough financial times. Now, though, secured credit cards are harder to find -- and harder to get.

For those unfamiliar with them, secured credit cards allow people with poor credit or no credit history to build their rating without presenting a risk to the bank. In other words, when you get a secured credit card you also open a security account. The amount in the account is your credit limit, so the secured card operates like a debit card in one sense, but lets you build your credit history at the same time.

What's going on with secured credit cards?

So why are there fewer secured cards out there? To understand the answer, you have to know what's going on in the credit card industry. Check out Credit Card Whiz Kid to stay up to date on all credit card news and keep yourself informed.

In the meantime, though, you simply have to know that the industry struggles financially as much as your next door neighbor. With the economic situation as it is, secured credit cards just aren't profitable for the majority of issuers. There are two major problems from a creditor's point of view:

1: The security account makes it probable you'll pay your bills in full each month, which means they can't collect interest -- which means they aren't making anything off your card.

2: Many people who apply for secured credit cards have chaotic credit histories, and some banks and issuers just don't want to take a risk with those people.

So what does that mean? If you don't have a credit rating, are you finished? Not necessarily. While many large banks and creditors have stopped issuing secured cards, many continue to produce them. It's just gotten a little harder to find the issuers, that's all. In other words, you might have to make a few phone calls or do a few minutes of online hunting to find a secured offer that's current and valid.

That said, it's far from impossible to rebuild your credit this way. Just be a responsible user and those secured credit cards will turn into the real thing before you know it.

For more tips on secured credit cards, saving money and avoiding getting taken, check out CreditCardWhizKid.com, a website that specializes in providing credit card tips, advice and resources: http://www.creditcardwhizkid.com/secured-credit-cards/