Having financial difficulties is a fact of life that most people will have to face at some time or other. For a lot of people when they have money troubles they end up hurting their credit rating. Once you have damaged your credit rating it can be difficult to recover. It can take years to have black marks removed from your credit report, and as long as they appear on  your credit report they will hurt you. For some people a secured credit card can help them to repair their credit rating, by showing lenders that you have learned from your past errors.

Secured credit cards work more or less just like any other credit card, but there are a  few differences. The most notable difference is that you will have to put down a deposit as security on your card. This is money is to make sure that you pay your bills. If you don’t make the payments the security deposit will be used to cover them. Normally you will need to put down 50-100% of your credit limit as a security deposit. This will vary depending on your credit rating and the credit card provider. When you close your account you will get this money back, providing you have paid all of your bills.

It is important that recognize the difference between a secured credit card and a prepaid credit card. Prepaid credit cards work basically like debit cards, you put money on the card and as you use the card this money used to make payments. There are no monthly payments, you pay everything up front. These can be valuable for people without credit cards as a way to make online purchases but they do nothing to help improve your credit. A secured credit card works like a credit card, you will receive a bill each month that you need to pay. Since a secured credit card will also report to the credit bureaus they can help you to improve your credit.

If you are using secured credit card to improve your credit rating you need to make sure that you use it in a responsible way. You can’t afford to miss payments or even be late making payments because it will all be reported to the credit bureaus. This is a chance to fix your credit but it is also a chance to make your credit worse. You need to show that you have changed your habits and are worthy of a better credit rating.

If you have bad credit it is important that you take steps to address the problem. One of the best ways to do this is with a secured credit card. A secured credit card can give you a second chance by allowing you to show lenders that you have improved your spending habits. Be careful with your secured credit card, if you continue to use it in the same way that you did before you will likely find yourself with even worse credit. Three of the most popular secured cards are the Capital One Low Rate Secured Mastercard, Capital One Guaranteed Secured MasterCard and if you want rewards but still need a secured card then you can go with the Cash Back Guaranteed MasterCard from Capital One. All the Capital One secured cards are guaranteed and give you a instant decision in about 30 seconds.

	Low Rate Guaranteed Secured MasterCard	Guaranteed Secured MasterCard	Cash Back Guaranteed MasterCard for Gas & Groceries
Interest Rate	14.9%	19.8%	19.8%
Intro Interest Rate	14.9%	19.8%	19.8%
Annual Fee	$69.00	$59.00	$79.00
Cash Advance APR	19.8%	19.8%	19.8
Credit Needed	Establish Credit	None	Poor

As the Credit Card issuing companies offer a variety of cards with various features, it is essential for the Credit Card applicant to choose the right Card that would suit his needs. The applicant has to consider a number of factors such as eligibility criteria, Interest rate, Interest free period, Balance transfer facility, Cash Advance Fee, Interest rate for Cash Advances, special offers etc. Before signing the documents, the applicant should make sure that he has read and understood the Terms & Conditions related to the specific Credit Card he intends to avail. If you apply for a Credit Card for which you aren’t eligible (age or income criteria) then your application will be rejected. Hence it is advisable to take some time to compare different credit cards and take a wise decision.

A Credit Card can be extremely useful in various ways, if used wisely. Say for instance you could avoid carrying cash, make online purchases, place phone orders and withdraw money at the time of financial crisis. On the other side if you don’t pay your bills in time or default the payments, you will have to face bitter consequences. The following information would help you to choose the right Credit Card for you.

Cash Advance Facility
Cash Advance means withdrawing money through your Credit Card. It offers the benefit of liquidity during the time of needs. The Credit Card issuer will allot a cash withdrawal limit based on your overall credit limit. The Card issuer will charge a fee called “Cash Advance Fee” on every withdrawal and would also charge an Interest rate for the money withdrawn until you pay the next bill.

Secured

The Secured credit cards are pretty easy to obtain. You have to put up a security deposit to get the card and will most likely start off with a low limit. For example most Capital One Secure mastercards start off around $250 but after using the card for about a year they may bump you up to $750 / $1500 or even higher. This is a great option if you have bad credit or no credit at all.

APR (Annual Percentage Rate)
Annual Percentage Rate is the yearly Interest rate that would be charged by the Card issuer, if you make part payments on your Bill. Most often Credit card Interest Rate is charged every month based on the average daily balance.

Balance Transfer Facility
This option lets you to transfer outstanding balances from your other credit card to the card you are applying. The benefits include low interest rate and easy monthly installments.

Reward Points
Almost all the Credit Cards offer this facility through which you gain points based on your spending pattern. Accumulated points can then be redeemed to buy gifts etc.

Add-on Card
Add on Card is a great way to present a Credit Card to your family members. The add-on card’s credit limit is based on your (primary card) credit limit. Moreover you are liable for all expenses made through the Add-on card.

Travel Credit Cards (Air Miles)

Travel cards are suitable for frequent travelers which offer reward points on travel, concession on Air tickets, lost luggage assistance and travel insurance. The features may depend based on the card selected by you.

Business Credit Cards
Business Credit Cards carry a lot of advantages to Businessmen. It helps to maintain a separate account for your Business expenditures, provides high reward points and high spending limits.

Student Credit Cards
Many Credit Card Issuers offer specialized cards for College Students. It helps them to build a good credit history and learn the credit management skills.

Gasoline Cards
This type of cards helps to fill up gasoline and to track your monthly fuel expenses. It also comes with cash withdrawal facility. It offers reward points/ rebates based on your fuel purchases. AMEX has some of the more popular Gas Points credit cards.

EMI Cards
EMI Credit Cards offer the facility of making purchases and paying the dues in easy monthly installments. It usually comes with a low interest rate and convenient repayment period.
 

At the end of the fiscal year in 2005, approximately 56 million credit cards were currenty in circulation across the country, with a very high sales volume exceeding $190 billion dollars (MasterCard and Visa). Here are some general practices to help keep you and your card safe. » Read more: Safe Credit Card Practices