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How can a secured credit card help after bankruptcy?

On Behalf of | Mar 10, 2021 | Bankruptcy And Debt Relief

One common thing people say when considering bankruptcy is that they don’t want to file because they won’t be able to get a credit card. They need one if they’re going to shop online or even buy things at the store, and using cash isn’t convenient. They’re worried about not being able to make things work financially if they file.

The good news is that you can get a credit card after bankruptcy. In fact, it’s one of the key steps to take as you build your credit back up.

The secured card removes the risk for the lender

A secured credit card is one that is “secured” by an initial down payment. The reason that lenders are nervous to give you a loan is that they see you as a risk, in that you may not pay the card off. With a secured card, you pay a set amount up front, and then you can borrow that much on the card. If you pay off your debt every month, nothing happens to your downpayment. If you fail to do so, though, the company knows they already have the money to cover it.

You can use this as a valuable tool by making those payments on time. This builds up a positive credit history. Proving you can and will pay makes it more likely that the company will give you a traditional credit card in the future.

Getting a fresh start

Bankruptcy gives you a chance at a fresh start, though it is all a process. Be sure you know what steps you’ll need to take.