Secured credit cards may be great tools for building or rebuilding your credit, but they aren’t without their downsides. The cons you should consider include:
- Some secured cards have high fees, so check carefully for what you have to pay. The best cards have no or low annual fees.
- There may be additional fees for things like withdrawing cash from an ATM.
- You may be charged for a credit limit increase. Imagine if you arrange with your issuer to change your limit from $500 to $750 and send the additional $250 to cover the difference. The issuer still might hit you with a processing fee for increasing the limit.
- It’s possible to underestimate how interest impacts your balance and subsequently you charge over your limit.
- There are rarely perks, like cash back or travel rewards You’ll have to wait on those until you can qualify for an unsecured card.