July 22nd, 2014 by Damon DeCrescenzo

Secured Credit Card Annual Fees



Happy Tuesday!


 As the latest refinance boom takes its last breaths, a number of my mortgage referral partners have been trying to squeeze every last deal they can.  Twice this week, I was asked to review credit reports with unusually low credit scores with just a few late payments between them.  The culprit?  Annual Fees!


It’s true that secured cards are a wonderful and dependable way for those with poor credit scores to quickly add positive credit (we recommend them all the time). Companies like First Premier, Cap One, and B of A offer these cards to consumers, often times not even considering their credit scores for qualification.


One caveat though – most of these cards carry a small annual fee.   For the consumer who regularly uses their cards, and therefore regularly checks their statements, this shouldn't be a problem.  For the two borrowers referenced earlier (and millions of others) who activate the card but never use it, this is a dangerous game.


You see, month after month the borrowers threw out the statements with $0 balance, and after a while they stopped opening them.  Fast-forward 13 months, when a negligible $29 annual fee goes ignored and unpaid, and presto – a 30 day late payment and a ruined refinance dream.


If you are recommending secured cards to your clients, be sure to also recommend they open their mail and read their statements.

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