Secured to Standard Woodstock Credit Card

Secured to Standard Woodstock Credit Card

Posted on March 2, 2021

A secured credit card can be a useful device for helping rebuild credit. It’s a unique product usually used specifically for this purpose. But what happens when you have improved your credit score enough to qualify for a standard credit card?

Our Woodstock auto loan team decided to find out.

A secured credit card is a specific type of financial product designed to help people recover from poor credit. It uses a security deposit you pay equal to the credit limit of the card. This protects the company from loss and, to an extent, protects you too.

If you miss a payment, that payment is taken from your security deposit. It can still impact your payment history, and therefore, your credit score but not always.

Standard credit cards are not secured in this way and use your credit score to determine acceptability and the credit limit.

Why switch from a secured to a standard credit card?

If you’re happy using a secured credit card and everything is working fine, why change it?

There are a couple of reasons:

• Lower interest rates – A cost of using a secured credit card is higher interest. If you don’t pay off the card in full, you will usually pay a higher interest rate on the outstanding amount.

• Lower card fees – Many secured credit cards come with annual fees and inactivity fees. These are another cost of using a card like this.

• No incentives – Many credit cards offer incentives to use them like travel points, loyalty points, free insurance and other goodies. You won’t get anything like that with a secured credit card.

When can you switch to a standard credit card?

You can switch to a standard credit card when you have your finances under control and a credit score of around 650 upwards.

As long as your income to debt ratio is no higher than 35% and your credit score is around 650, you should be able to qualify for a standard card. If you’re not quite there yet, get your ratio down to 30% and you stand a higher chance.

A credit score around 650 and above should also mean you quality for a standard card. Meet those criteria and you’re ready to switch.

How to switch to a standard credit card

Switching credit cards is simple. Either sign up to a standard card with your current secured card provider or shop around for a better deal. Look at what’s available but compare the whole market before applying for a card.

A credit card application results in a hard inquiry on your credit report. Too many of those at once and your score will dip again, which could cause problems.

Look at the market, find a credit card that works for you and apply for it. Once accepted, clear your secured credit card and close it down. You may have to wait a while for the refund as providers like to keep your money until they are sure there are no more charges.

When you qualify for a standard credit card, you should also qualify for a standard car loan. You know where to come if you ever need one!

Contact Unique Chrysler for help, advice and competitive Woodstock car finance.

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