If you find yourself in the catch 22 situation of being unable to obtain credit because you have never used credit, then secured credit cards are a good way to start to establish a good credit record. When bad credit is your problem and it needs to be re-built as good credit, secured cards are often the safest way for you to have a second chance to re-establish your financial reputation.
Generally secured cards are expensive as even if they advertise no annual fee they manage to sneak in a monthly processing fee, and it is hard to find one which does not charge you a lot to use them. Some fees go as high as the allowable 25% of the credit limit. The Wells Fargo secured visa credit card stands out as having an extremely low annual fee of just $18.00, with no other applicable charges unless you fail to pay on time or have a returned payment. This is a good deal and not very common.
In order to be eligible for a Wells Fargo secured card you need to first open a collateral account with them, which will hold the amount of your deposit which reflects your credit limit. The minimum deposit is $300 giving you a credit line of the same amount, and deposits can be as high as $10,000 but that is not advisable at all as they don’t pay any interest at all on your collateral account. You may not use or withdraw any funds from the collateral account until such time as the secured card is closed, but Wells Fargo do promise to review your card account periodically and typically allow you to move from secured to unsecured status within a year.
The current APR is variable at 17.49% but if you are using the card as a credit builder then you it is prudent to repay the full balance in full each month and thus not incur any interest charges. There is a facility to set up either online payments or automated payments, with timely email reminders when your payment is about to fall due. Another good feature is you can choose your own payment date to suit you, and there is a grace period of 25 days. All internet banking services are free, which once again is not the norm with many secured cards that charge you for the privilege after a couple of account inquiries.
A penalty APR of up to 27.42% kicks in if you miss more than 2 payments and will stay in place until 6 consecutive monthly payments have been made on time. Obviously missing payments is the last thing you should be doing if trying to establish a good credit reputation and if you do so you are unlikely to find unsecured credit any time in the future. If you do pay late then standard penalty charges are $20 on balances under $250, $29 under $500 and $30 over $500. Charges for returned payments are $39.
The card also provides free car rental insurance and can used anywhere with the visa logo. If you use the card for your intended purpose as a credit builder and ensure all payments are met on time then the card is cheaper to run than most secured cards where annual and related fees can be much higher. The annual fee of just $18 is the primary draw of the Wells Fargo secured visa if you are looking for credit card to help you on the way to achieving an improved credit score.