Are Secured Credit Cards The Answer To Your Debt Problems?

The more money you have, the more you can borrow.  This makes sense from a lender’s perspective, because someone who has plenty of valuable assets is more likely to be able to pay you back.  From the perspective of someone who can only afford to purchase a house, car, or other expensive but necessary item by financing it (which is most of us), it is profoundly unfair.  In the documentary Lambert and Stamp, Pete Townshend of the band The Who tells the story of how, when he was newly of legal drinking age, his friend Kit Lambert, the son of a wealthy orchestra conductor, took him to a wine shop in an upscale neighborhood.  Townshend, who was then a struggling musician who could not afford the merchandise of the shop, expected Lambert to pay for the wine that the two chose.  To Townshend’s surprise, the store clerk allowed Lambert to buy the wine on credit, in other words, to drink it without paying for it.  When Townshend’s band achieved commercial success, he returned to the store and also bought wine on credit.  Certainly, there must be a simpler way to get access to credit than becoming a rock star or having rich parents.  A Pennsylvania consumer law attorney can help you find solutions to restore your credit-worthiness.

How Secured Credit Cards Help to Build Your Credit

A secured loan is one where, in order to get the lender to give them the money, you must give them some money or other property (called collateral), which the lender returns to you if you pay the loan in full, but which the lender keeps if you stop paying.  Car loans and home mortgages are examples of secured loans.  In an unsecured loan, all the borrower must do to get the money is sign a statement promising to repay it; most credit cards are unsecured loans.  You can only get unsecured loans if your credit is good enough to qualify for them.

Secured credit cards are an option for people who do not qualify for most credit cards, such as people who have recently declared bankruptcy.  Most secured credit cards have a credit limit of $200; when you open the account, you pay a $200 deposit, and then you make purchases just like a regular credit card.  If you do not pay off your purchases in full at the end of a billing cycle, interest will accrue.  When you close the account, the credit card company refunds your deposit.  Some secured credit cards automatically convert to unsecured (and refund your deposit) after you pay the balance in full for a certain number of consecutive months.

Contact an Attorney Today for Help

A Philadelphia debt collection abuse attorney can help you think of a bankruptcy filing as a new beginning and begin rebuilding your credit after you have filed for bankruptcy.  Contact Louis S. Schwartz at CONSUMERLAWPA.com to set up a free, confidential consultation.

Resource:

nerdwallet.com/article/credit-cards/secured-credit-cards-vs-unsecured-difference