Many people think that getting a bank secured card is a waste of time. The real truth is that it depends on what the terms are on the credit card application that you would sign. You see not all secured cards are created equal, so here are some things that you should make yourself aware of before you sign on the dotted line. First off, if you're getting a bank secured card to help increase your credit score you need to be sure that it reports to the credit bureaus. Some cards report to all three major bureaus (Equifax, Experian and Trans Union). Others only report to one or two of them. The danger is if you sign up for a card that doesn't report to any of the big three. If the card does not report your positive payment history you wont get the benefit of a positive impact on your credit score.
As I just mentioned you want to have a positive payment history to report to the credit bureaus. This means if you're not in the position to use the card each month and make on time payments its probably not the right time to have any type of credit card, even a secured card. Although a secured card is a great option to monitor your spending habits and control your spending with predetermined spending limits, it still should not be abused.
The best way to use a secured bank card for an increase in your credit score should be for average spending each month. At the end of each month, or whenever your billing cycle ends, you should be able to pay off the bulk of what you have charged. There is a little trick that you can use to make this have an even better benefit for your credit score. If you did not notice I wrote pay off the bulk of what you charged, not all of what you charged.
I know this might sound crazy but when you make your payment don't pay off the entire thing. Always leave just a little bit on the card. Why the heck would I do that you might say? Well credit is a complicated animal.
When a bank reviews your spending and payment habits they look at every detail. If you always pay off everything that was charged each and every month it looks like there is no need for any additional increase in credit. While if you leave a little bit on the card each month, but still make all your payments on time, they see this as someone that is responsible with their credit and can manage their finances from month to month. Yes, this may cost you a few extra cents every month but the benefit to your credit score and an eventual increase in your credit limit will be the benefit.
So be sure to read the fine print. Don't get a secured card that doesn't report to all three major credit bureaus and most of all be sure to make on time payments so your credit score can increase.