topic Re: Secured card help in Credit Cards

Secured card help

Lambo23 — Wed, 01 May 2013 18:09:25 GMT

A relative of mine has terrible credit along with 10 collections on their reports. No way they will ever be able to pay them back. They have been on her reports for 4-5 years now. They are going to try and get a secured card through capital one. If they only get one for 300$ limit and have to pay for things that are over 300$ can they "force" payments from the bank to the secured card?

Re: Secured card help

Anonymous — Wed, 01 May 2013 18:22:38 GMT

I'm not entirely sure but I think if you link your checking to your secured card they cover each other if the funds aren't in the account...

Re: Secured card help

InvincibleSummer3 — Wed, 01 May 2013 18:24:23 GMT

@Lambo23 wrote:
A relative of mine has terrible credit along with 10 collections on their reports. No way they will ever be able to pay them back. They have been on her reports for 4-5 years now. They are going to try and get a secured card through capital one. If they only get one for 300$ limit and have to pay for things that are over 300$ can they "force" payments from the bank to the secured card?

If you go overlimit, there can be a fee and they can jack up your interest rate. Why would they ever need to go over $300?

Re: Secured card help

NonSufficientFunds — Wed, 01 May 2013 18:24:53 GMT

@Lambo23 wrote:
A relative of mine has terrible credit along with 10 collections on their reports. No way they will ever be able to pay them back. They have been on her reports for 4-5 years now. They are going to try and get a secured card through capital one. If they only get one for 300$ limit and have to pay for things that are over 300$ can they "force" payments from the bank to the secured card?

If the purchase is for an amount above the line of credit, the charge will be declined. In such case the amount of the purchase that exceeds the available credit, would have to be made up through another form of payment.

Also, since you are already talking about maxing-out the card, before you have even received it, you should remember that doing so will cause the credit score to drop even further than it already is.

Your relative needs to re-evaluate the need to apply for any credit, secured or not - as the options are already severely limited - burning the last available bridge is something that has to be very carefully considered.

Re: Secured card help

NonSufficientFunds — Wed, 01 May 2013 18:27:33 GMT

Another option is to open a PayPal account and request the debit card.

That can be linked directly to a personal checking account to cover any amount that is not in the PP account.

Re: Secured card help

InvincibleSummer3 — Wed, 01 May 2013 18:28:13 GMT

@NonSufficientFunds wrote:
Another option is to open a PayPal account and request the debit card.

That can be linked directly to a personal checking account to cover any amount that is not in the PP account.

Does that report? What a cool idea.

Re: Secured card help

NonSufficientFunds — Wed, 01 May 2013 18:32:24 GMT

@InvincibleSummer3 wrote:
@NonSufficientFunds wrote:
Another option is to open a PayPal account and request the debit card.

That can be linked directly to a personal checking account to cover any amount that is not in the PP account.
Does that report? What a cool idea.

Sorry, No - PayPal is a debit account. It can be used to obtain a fee-free debit card, but it is not a credit card, and does not report.

Re: Secured card help

InvincibleSummer3 — Wed, 01 May 2013 18:40:57 GMT

@NonSufficientFunds wrote:
@InvincibleSummer3 wrote:
@NonSufficientFunds wrote:
Another option is to open a PayPal account and request the debit card.

That can be linked directly to a personal checking account to cover any amount that is not in the PP account.
Does that report? What a cool idea.
Sorry, No - PayPal is a debit account. It can be used to obtain a fee-free debit card, but it is not a credit card, and does not report.

Ah, I see. Thanks for clarifying.

Re: Secured card help

Lambo23 — Wed, 01 May 2013 18:41:03 GMT

Obviously no one understood what I meant. This person has bills to pay. They would like to use the card to pay the bills to build their credit. For now say they have only 100$ for a deposit and that gives them a $300 limit.
If the limit is $300 and they push another 300$ to the card from the bank bill pay system, they now have a $300 credit along with a $300 limit. Would they be able to use it to make a purchase for say $500-600?
Similar to a normal credit card in which you need to spend more than your limit on a purchase. You can push money over from the bank and have a credit plus your credit line. Not sure if that would work for a secured card as well. That is my question..

Re: Secured card help

InvincibleSummer3 — Wed, 01 May 2013 18:42:13 GMT

@NonSufficientFunds wrote:

Also, since you are already talking about maxing-out the card, before you have even received it, you should remember that doing so will cause the credit score to drop even further than it already is.

Your relative needs to re-evaluate the need to apply for any credit, secured or not - as the options are already severely limited - burning the last available bridge is something that has to be very carefully considered.

This. Times a million.

Re: Secured card help

InvincibleSummer3 — Wed, 01 May 2013 18:45:45 GMT

@Lambo23 wrote:
Obviously no one understood what I meant. This person has bills to pay. They would like to use the card to pay the bills to build their credit. For now say they have only 100$ for a deposit and that gives them a $300 limit.
If the limit is $300 and they push another 300$ to the card from the bank bill pay system, they now have a $300 credit along with a $300 limit. Would they be able to use it to make a purchase for say $500-600?
Similar to a normal credit card in which you need to spend more than your limit on a purchase. You can push money over from the bank and have a credit plus your credit line. Not sure if that would work for a secured card as well. That is my question..

I would not even attempt this with a secured card. If you wanted to make big purchases, why not just add a larger deposit to the card? The point is to show responsible credit behavior so that eventually it's possible to get unsecured credit. If someone can't afford the deposit they need, or can't manage the use of the card carefully - then maybe this isn't the way to go.

Re: Secured card help

NonSufficientFunds — Wed, 01 May 2013 18:53:09 GMT

@InvincibleSummer3 wrote:
@Lambo23 wrote:
Obviously no one understood what I meant. This person has bills to pay. They would like to use the card to pay the bills to build their credit. For now say they have only 100$ for a deposit and that gives them a $300 limit.
If the limit is $300 and they push another 300$ to the card from the bank bill pay system, they now have a $300 credit along with a $300 limit. Would they be able to use it to make a purchase for say $500-600?
Similar to a normal credit card in which you need to spend more than your limit on a purchase. You can push money over from the bank and have a credit plus your credit line. Not sure if that would work for a secured card as well. That is my question..
...If you wanted to make big purchases, why not just add a larger deposit to the card?

Of course - I forgot about this option: when you log into your Capital One Secured account, there is a button that says something like: "Increase your available limit by adding funds to your account" - this is the easiest way to get CapOne to report a higher limit (and increase the available funds - so you don't need to worry about exceeding such a small initial limit).

Re: Secured card help

Lambo23 — Wed, 01 May 2013 18:55:54 GMT

The real problem is this person does not feel comfortable putting $500+ down for a deposit. Maybe once they get the card and are more comfortable with it then they will add more money to the deposit. Thanks everyone for your input.

Re: Secured card help

vish1 — Wed, 01 May 2013 19:00:36 GMT

@Lambo23 wrote:
The real problem is this person does not feel comfortable putting $500+ down for a deposit. Maybe once they get the card and are more comfortable with it then they will add more money to the deposit. Thanks everyone for your input.

You mentioned in a post that the person is doing this to rebuild. They don't need to use the card extensively to rebuild. Just use it occassionally and PIF.

Heavy usage has NO role in credit building.

Re: Secured card help

Lambo23 — Wed, 01 May 2013 19:02:30 GMT

@vish

Good point. Will mention to them.