If you are battling with the problem of bad credit, secured credit cards can help you rebuild your credit history.

Unlike prepaid credit cards, secured cards give you a line of credit, and your major payment activities will be reported to the major consumer reporting agencies (this ensures that your activities are well recorded in your credit report).

Contrary to what many people think, getting a credit card is easy. You only need to start by having funds deposited at the bank. These funds will serve as your collateral for the credit card. A secured credit card works like any other type of credit card. And you can use it to rebuild your credit history by making on-time monthly payments to all your creditors and by keeping your balances low relative to the credit limit on your card.

Many credit card issuers offer secured credit cards that attract no annual fees. While some waive the annual fee for the first year and charge a fee for subsequent years, others waive the fee for more than one year, while some don’t charge an annual fee at all.

With bad credit or no credit history at all, you can’t obtain an unsecured credit card, which requires good credit or steady income. So, you are left the option of a secured credit card. Here are the guidelines for obtaining a secured credit card that charges no annual fees.

How to Get Secured Credit Cards with No Annual Fees

1. Save the required minimum deposit

A good credit rating would have sufficed as proof of your capability to repay credit card debt; that’s what happens in the case of unsecured credit cards. But since you have bad credit, the credit card issuer will see you as unlikely to be able to pay back the debt. So, they request that you deposit a specified amount as security. Secured credit card issuers typically require a minimum deposit of $49 to $500 and can have a maximum deposit of up to $100,000. You might need to create a budget that includes saving a small amount of money each week or month for the secured credit card deposit.

2. Find the best secured credit card

Using the internet, you can research the best secured credit card offers available to you. Secured credit cards are issued by banks and credit card companies as well as credit unions. Each issuer has its own set of unique requirements such as fees and deposit amounts. You need to find out these details about each issuer before considering applying for their secured credit card.

During your search for the right option, eliminate secured credit card issuers that charge high application fees, have high interest rates, or that have additional products such as life insurance as application or purchase requirement. And since you are on the lookout for a secured credit card with no annual fees, you want to ditch all options that attract annual fees.

If you are a member of a credit union, ask about secured credit cards offered by the union. Most of the time, credit unions offers their members lower interest rates and charge no annual fees on secured credit cards.

3. Select the best issuer as per your criteria

Based on annual fees, interest rates, application fees, minimum deposit, and other factors, decide which credit card issuer to go for. Then contact the issuer about the procedures for obtains a secured credit card. Some issuers will request that you open a certificate of deposit (CD) or savings account with them. You may also be required to show some proof of your income.

4. Read and follow application instructions

After obtaining the application form, you must read everything in detail. Ensure that there are no additional fees that were not mentioned earlier. And ensure that required fees are not higher than what have been initially stated. Then fill the form carefully, following the instructions given. Attach required additional documents, and submit the application as stated in the guidelines.

5. Save the minimum deposit and apply for your card

However, you must bear in mind that the credit card issuer reserves the right to decline your application for whatever reason. But this is unlikely to occur unless there are major concerns.

Once your application is granted, you need to save the required minimum deposit and apply for your secured credit card. You may not be able to apply immediately after making the deposit, though, as some issuers require a set, usually brief interval.

6. Wait for feedback from the credit card issuer

After applying for a secured credit card, you will need to wait for some time (this could range from a few days to a few weeks) to know if your application has been granted or declined. You will receive a letter from the credit card issuer stating that your application has been granted or declined. If your request was declined, the reason for this might be stated in the letter. If you really took each step according to instructions and have no major concerns (such as criminal record), you will most likely have your application granted.

7. Collect your card

Once your application is granted, you will be instructed to pick up your card on a specified date and at a specified location. Visit the location on the stated date, collect your secured credit card, and start rebuilding your credit history.

Ajaero Tony Martins