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After a bankruptcy, you may be surprised just how quickly credit card offers begin to show up in the mailbox again. Some of these offers may be for secured cards. For some people, secured cards can be an ideal way to rebuild credit and move towards securing lower interest rates in the future. Before you open any kind of new credit, consult with your bankruptcy attorney, particularly if you are in a Chapter 13 repayment plan or you bankruptcy has been adjudicated yet, to avoid any complications. Here are the answers to some questions you may have about secured cards.

What is a secured credit card?

Traditional credit cards extend a certain amount of money to you with the understanding that you will repay it. With secured credit cards, you make an initial deposit before you have access to any credit. The amount that you deposit is the credit limit on your card. In some cases, the card issuer may extend additional credit to you if you manage the card appropriately over a certain period of time. This means making all payments on time.

What are the advantages?

It’s difficult to get through life without a credit card. You need them at hotels, to rent cards, and to make reservations. A secured credit card gives the flexibility of having a card, which could otherwise be difficult immediately after bankruptcy. One of the biggest advantages, however, is rebuilding your credit. As the secured credit card provider reports your good spending habits to the bank, you can expect your credit score to rise.

How do I choose a card?

Before you apply for a card, check the small print. Some secured cards come with hefty fees attached, such as costly insurance on your card. Other providers don’t report to credit bureaus, which negates the purpose of the card. Look for a secured card with a low rate and low annual fee that reports to credit bureaus.

The bankruptcy lawyers in Schaumburg at Cutler & Associates, Ltd. are dedicated to helping you recover financially, not just complete your bankruptcy paperwork. We’re here to answer your questions before and after you file