Dougster75

Just a quickie to anyone who uses a Secured Credit card:

As I understand it, providers like BoA or Orchard (HSBC) give you a credit limit based upon 100% of the amount deposited which can be anywhere between $200 and $15,000 (for Orchard).

Question:

Do amounts due on the account get taken automatically from the secured balance or can you leave the secured balance (and thus not reduce credit limit) and pay separately on a monthly basis.

As I understand it, credit can in some cases be built most rapidly by running a monthly balance of approx 10% of ones available credit (even if you don't need to). Is it still possible to run a balance on a secured card or will they keep applying full payment from the deposited funds?

Does anybody have any idea on the optimum amount of the initial deposit? eg. If I deposit $200, that presumably appears as my available credit with the bureaux and therefore fairly worthless. Is there any benefit to tying up $000's in this deposit?

Really appreciate any help. I have done quite a bit of reading/searching on this subject and apologize if I've overlooked the answer elsewhere.

Thanks,

Doug.

tonrob

You pay the bill separately just like any other CC.

Don't know of any advantage of getting a higher limit. I did $500.

Ray

Worth a read

http://britishexpats.com/articles/us...nce-in-the-us/

fatbrit

Put $500 on the card.
Never have more than $100 outstanding at any time.
Pay off in full when bill arrives.
Rinse and repeat a minimum of 7 times before you apply for another credit card.

Avoid Orchard Bank like the plague.
Use BoA, WF/Wachy, or Chase for your secured card.

LBR

I have a secured credit card with Orchard Bank for $500. I think the way it works is they keep the $500 separate in a savings account and you just pay the balance off the credit card like you normally would.

I guess if you defaulted on the balance then they would just keep the money in the savings account to cover the debt.

Dougster75

Thanks all - this is very helpful. Fatbrit - I had been tending towards Orchard Bank as they had a much lower APR than BoA which made them seem fairer. Have you heard bad things about them? BoA is tempting as they upfront seem to make the path to the coveted Unsecured card more clear.

So frustrating when we had credit coming out of our ears in the UK. I know everyone here has been through it to some degree or other... Wish I'd started earlier on this path but had relied on the carried-over Amex building some credit (which it hasn't done enough).

Cheers,

Doug.

wordfool

Much as I hate BofA and its parasitic ways (unless you have a shed load of money in BofA accounts) I would go with a BofA card simply because it will likely be a speedier and smoother path to a BofA unsecured CC, particularly if you have regular bank accounts with BofA. For a $500 secured card that you pay off each month APR should be utterly irrelevent. Even if you carry a balance you'll be out what? About 20p?!

This is, of course, based on nothing more than a hunch and 15 years dealing with BofA, which was my first bank when I arrived in the US having been relieved of my entire credit history at the border.

fatbrit

No extra points for paying interest -- pay it off in full every month and the interest rate is irrelevant.

fatbrit

Precisely! Orchard is not a card you'd want to keep in your portfolio. But as it's your first card, it'll really muck up your fledgling score should you scrap it after a year or so since it will also be your oldest credit line.

Dougster75

Cool. Thanks all. This is good stuff.

EricK

If you haven't already, it's worth investigating taking out a subscription to AIG corporate services. They arranged an unsecured credit card for me with HSBC with a $10,000 credit limit, had to provide them with various documentation including my contract of employment etc, but was very quick and easy.

CarlWain74

I went with a secured credit card with Wells Fargo.. Some things to watch out for..

They placed the secured funds in a "Way 2 Go" savings account, which attracts a $5 monthly fee if you don't inject funds on a monthly basis! Something they forgot to mention when they set up the accounts.

However, I've been using it for a few months now and never go over $1000 ($1500 secured) and pay back on time...hoping to get rid of this soon!

celticgrid

One thing to consider, though I've no idea whether it matters...

We used a secured card on our arrival (2008) and used it sensibly, though we did set up a fairly large limit as there was stuff we had to buy! Now we have reduced the limit, as we have other credit cards, and that frees up the cash that was deposited to secure the card.

As a result the credit history shows a limit of $1,000 and a maximum balance of $2,500. Of course, when the balance was at that level the limit was substantially higher, but that is not reflected on the credit history report.