First of all what is a secured card? A secured card requires a cash deposit that becomes the collateral for that account. You can get one from certain Banks and Credit Unions.

There are two main reasons that you might want to know how to go about getting a secured credit card; one is if you have no credit and need to establish some kind of payment record to build up a thin or new credit file, the other is if you have such bad credit that no regular credit card company will give you an account.

There are several things you need to watch out for:

1. Charges - Ask about Application fees, Processing fees, and Annual fees. Shop around for a card that has a low or no application fee. As always - Read The Fine Print! Make sure that there are no hidden fees and that the annual fee is not more than your line of credit!

2. Requirements- Find out how much you have to deposit. Most secured cards require $300-$500. Also ask if there are other restrictions on who can open a secured card account.

3. Depost Use - Find out what the deposit may be used for. Will it be used to pay your first late payment? Will it be eaten up by the fees charges?

4. Limit - Your limit may be less or some percentage more that your deposit. Check to see what you can borrow without going over your limit. Be sure to factor in the fees! You may qualify for a higher limit with no increase in the original deposit once you show that you can pay ontime.

5. Interest Paid TO You- There should be at least the same interest you would get if you opened a savings account. Check to see what your options are. Also check to see how long you have to leave the money in the account after it is closed.

6. Interest Paid BY You - What is the APR? (Annual Percentage Rate) You want to pay off all charges each month so as not to incur any fees, but if you do have to make a partial payment one month, make sure you get the best rate you can.

7. Reporting to the Credit Bureaus - The whole point of getting a secured card is to build your credit history. If the card issuer does not report to at least one of the major credit bureaus it does you no good! ALSO make sure it is not reporting as a secured card. That does not look good to other lenders when the look at your report.

8. Conversion to Unsecured - Make sure this card can be coverted to an unsecured card. Your goal is to have this card convert, so ask how long this will take. While you may be eligible in 6 months, the average is 1 year of making ALL payments on time.

9. Insurance - This is one of those hidden fees. You should not have to pay for this, afterall, they already have your money as a deposit!

10. Sources - Ask at your bank, or better yet at your local credit union. Credit unions will most likely have better interest rates and may be more willing to offer helpful advice than your bank.

Hopefully you will never need this information because you have had bad credit, but perhaps someone you know has a teenager who needs to begin to establish good credit. Pass this on!

Senior Citizens and Credit

My mom lives in Florida in one of those retirement communities. When my dad was alive he took care of all the finances and always promised mom that 'one day I will show you how to do this.' Well, that one day never came, and when he died she was left to deal with all of the bills and taxes and other finance related issues that he had dealt with for the two of them. Now, don't get me wrong, my mom is a smart woman and took care of finances when they were younger, but at 88 she really was not ready to take it all on by herself.

One thing my dad did do was to make sure that both of their names were on the credit cards that they used.  If he had not done that, she would not have had any credit cards to use after his death.  It is possible but not easy to open a new account when you are retired. The credit card companies require proof of sufficient income from your bank to even start an application.

I guess the point I want to make here is  - make sure you have at least one credit card in your own name. Having a joint account is fine as long as you are not just an 'authorized user'.  An authorized user may use the card but is not responsible for paying the card.  An authorized user can no longer use the card if the owner has died.

Fortunately, my sister and I were able to visit mom often in those first few months and get her on track. She did not want to use a computer so we bought her a fax machine instead. Now she deals with the bills she understands and faxes me the ones she does not. Actually, she faxes me all kinds of stuff - junk mail, cartoons from the paper, even a copy of her Economic Stimulus check because she couldn't figure out why the government was sending HER money, and when did she have to pay it back!?

So, if you know any seniors, make sure they have a credit card in their own name...just in case.