Secured credit cards – a short-term solution to credit problems

Secured credit cards can be the perfect short-term solution to financial difficulties. If you find yourself or your business turned down for more traditional products, a small business secured credit card may be the answer.

By far the most economical way to use a secured card is to pay the balance off in full each month. This is because such cards tend to have significantly higher interest charges so carrying over an outstanding amount from one month to the next can prove a very costly affair.

Business experts agree that these high costs mean that such cards should only be seen as a short-term measure. Your ultimate goal should always be to reestablish or establish credit to the point where you are offered an unsecured credit card instead.

Many small business secured credit cards offer low or zero percent interest rates in the first six months while others waive annual fees during the first year. If you are fully in control of the way you use the card and are able to shut down the account at the end of these introductory periods, such offers can be financially worthwhile. However, if you find yourself continuing to use the card the fees and charges can quickly reach the point where they empty your account before you have even had a chance to spend.

If you have enough discipline to use a credit card in a responsible manner, then you should be able to do the same with a regular card. Once you can convince a provider that this is true – and it usually takes between six months and one year of responsible sue to do so – then you should be able to transfer to a cheaper, more convenient regular credit card.

As with any other financial undertaking, it is important that you read the fine print so you are totally aware of exactly what you are paying for.

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