If you have no credit history or are trying to repair your credit standing, a bank-secured credit card is your best option. By securing your credit with your own savings account, you can have a fully functional credit card and be sure that you have the ability to pay whatever balances you accumulate. Read on to find out more.

This kind of card looks and works much like a regular credit card, but uses your bank deposit as a guarantee or collateral. Should you be unable to pay the amount due on time, for example, the bank can apply your deposit to your outstanding balance.

A bank secured credit card is perfect for consumers who do not qualify for regular credit cards either because they have no credit history yet, or because they have gone bankrupt and therefore have undesirable credit ratings. Having a bank secured credit card shows the bank that you are financially capable of paying monthly dues. If you use the card responsibly, the bank may eventually provide you with an unsecured credit line.

Because you will only get to charge an amount that corresponds to your deposit, you can be sure that you wont overspend. If you find yourself unable to pay the balance, for example, the bank simply deducts the payment from your savings account. With a bank-secured credit card, theres no risk of incurring debts.

But like all other credit cards, the disadvantages of a bank-secured credit card crop up when you use it irresponsibly. If you do not pay on time, for example, you will be faced with high interest fees and late payment charges.

Most bank-secured credit cards only allow limited transaction frequencies, which means you can only use it a specified number of times. The banks use this measure to protect against overdrafts. It is also quite difficult to close a bank-secured credit card you will not get your deposit immediately. The bank will keep your money for a few more billing cycles in order to make sure that no sketchy charges were made.