A solid credit score can go a long way towards helping you qualify for loans and getting the best interest rates on what you borrow. Credit cards are an invaluable tool for building credit because with responsible credit management by you you can establish a positive payment history, which carries the most weight in credit score calculations.
If you’re starting from scratch with building credit or your score is low because of some past credit mistakes, getting approved for an unsecured credit card may be challenging to say the least. That’s where a secured credit card can come in handy.
With a secured card, you put up a cash deposit that serves as your credit line, it’s used as collateral should you be unable to meet your obligations with your credit card. Typically, secured cards have a limit ranging from $200 to $500, although some card issuers may let you charge more with a bigger deposit. Your maximum credit limit will generally be determined by the amount of the security deposit you provide, however your credit history, your income and other factors may also affect your maximum credit limit. As you make purchases and pay them off each month that activity shows up on your payment history, providing the card issuer reports your transactions to the major credit bureaus. As long as you manage your credit card, as well as your other credit obligations, responsibly you can work at improving your credit score.
There are a number of secured credit cards on the market and while they may look the same, it pays to compare cards carefully to see which one is the best deal in terms of the interest rate and fees. Bank of America offers the BankAmericard® Secured credit card to individuals who need a little help with getting their credit on track. We’ve broken down the card’s finer points to help you decide whether it’s a good fit for your wallet.
Main card features
BankAmericard® Secured credit card is fairly straightforward in terms of what the card offers. The minimum refundable security deposit that’s required to open the account is $300 and a maximum credit limit of $4,900. Maximum credit limits are determined by your income, ability to pay the established credit line and the amount of the security deposit you put up. In the event you provide a deposit which is more then the calculated maximum amount based on your ability to pay, the difference will be returned to you in the form of a check.
Make sure the card issuer reports to all three of the major credit bureaus—Experian, Equifax and TransUnion—which means both positive and negative information will show up on your credit report.
Bank of America will review your account periodically, and based on your overall credit history, which includes other credit cards and loans, you may qualify to have your security deposit returned to you. If you’ve paid on time faithfully and kept your balance low, and otherwise met all credit obligations you have, you may be able to get your security deposit back while you continue to use your card. However, some cardmembers may not qualify.
Interest and fees
Your credit score and other related factors affect the interest rates you are eligible for on your credit lines, and with secured cards, the rate tends to be higher because you’re perceived as more of a credit risk. With the BankAmericard® Secured credit card, the variable Standard Annual Percentage Rate (APR) is currently set at 22.49% for purchases. This is a variable rate, meaning the rate can fluctuate based on changes, in this case, changes in the Prime Rate. That same 22.49% variable APR applies if you’re transferring a balance to the card, and for Direct Deposit and Check Cash Advances.
On the fee side, there is an annual fee of $39, that’s comparable to what some other secured credit cards charge. The fee for balance transfers is either $10 or 3% of the amount of each transaction, whichever is greater.
Other card benefits
The BankAmericard® Secured credit card isn’t a rewards card, which means you won’t earn any points, miles or cash back for using it. Card members do get a few nice perks, however, such as ShopSafe® protection when you’re shopping online which is a free service when you shop online to create a temporary credit card number so your real card number remains protected and private, chip technology for enhanced security and protection when making purchases at chip-enabled terminals and you can set up account alerts so you know when your payment is due (Wireless carrier fees may apply. Alerts received as text messages on your mobile access device may incur a charge from your mobile access service provider.)
Why you should choose this card
When it comes to secured credit cards, we think the Bank of America’s version is a good pick for anyone who needs help improving their credit or establishing credit for the first time and has enough cash to cover the minimum deposit. The card’s maximum credit limit is generous compared to what some of the other secured cards that are available offer. If you can afford to make a bigger deposit, this card can give you a lot more spending power. Just remember your maximum credit limit will be determined not only by by the amount of the security deposit you provide, but also your income and your ability to pay the credit line established.
If you already have a Bank of America checking account, you may have an easier time getting approved for this card since you’re an existing customer as long as you have handled your checking account responsibly. One nice thing you can do with a secured Bank of America credit card is link it to your checking account as a form of overdraft protection. If you run your checking account into the red for some reason, you can use your credit card to cover the charges without incurring a huge overdraft fee, as long as you stay within your credit limit. The Overdraft Protection Cash Advance fee is $12 for each transaction, (if you are enrolled).
Why you might prefer a different card instead
The BankAmericard® Secured credit card reports your account activity to the credit bureaus, which is helpful when it comes to your credit score but you don’t get a lot of extra bells and whistles. There are a handful of secured cards that offer rewards when you make purchases, which may be a reason to consider a different card if you want to earn back some of what you spend.
The SKYPASS Visa® Secured card from U.S. Bank, for example, offers you 1 mile for every $1 spent on eligible net purchase, along with 5,000 SKYPASS bonus miles after you make your first purchase. If you were to charge $5,000 in the first year, you’d earn 5,000 miles on your eligible purchases, plus the 5,000 SKYPASS bonus miles for a total of 10,000 miles you could use towards a flight. You don’t have that ability to earn rewards with the BankAmericard® Secured credit card.
If you need a basic credit card so you can work on improving your credit with responsible use, applying for the BankAmericard® Secured credit card may be what you are looking for. The annual fee isn’t as high as what some of the other secured credit cards charge but you’ll want to make sure you’re paying for purchases made on the card in full each month to avoid interest charges. Use this card, as well as handling all of your other credit obligations responsibly, and you can work at building or rebuilding your credit.
BankAmericard® Secured Credit Card:
|Main Card Features||Interest Rates - Annual Percentage Rates (APR)||Fees||Other Card Benefits|
|Minimum refundable security deposit of $300 is required to open this account||22.49% variable APR on purchases, balance transfers and for Direct Deposit and Check Cash Advances||$39 annual fee||ShopSafe® protection and optional overdraft protection for those with Bank of America checking accounts|
|Credit lines maximum of $4,900 (based on the amount of your security deposit, your income and your ability to pay)||Balance transfer fees - Either 3% of the amount of each balance transferred or $10, whichever is greater||Account alerts, online and mobile banking|
Disclaimer: The information about the BankAmericard® Secured credit card and the SKYPASS Visa® Secured card from U.S. Bank has been collected by creditsesame.com and has not been reviewed or provided by the issuer of the card.
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