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How Guaranteed Credit Card Offers Work

The guaranteed approval or guaranteed acceptance credit card is a mechanism intended by the credit card industry to assist an ever-increasing number of people who are unable, or sometimes incapable of acquiring home and car loans, inexpensive car insurance, or even land a job let alone getting their hands on a regular credit card because of one underlying reason – poor credit scores. Whether or not the reasons for being denied credit are ever fully understood or revealed to the consumer, it all boils down to a few key factors: not paying the minimum balances on time; exceeding the credit card limit; carrying a high debt on the card; opening or closing too many credit card accounts; and finally, delinquencies on other loans, like mortgages, auto, or student loans, which do not escape the all-seeing eyes of the credit reporting bureaus.

Regardless of how daunting the list of potential reasons for an unfavorable credit review is, the fact remains that it is indeed very possible to find guaranteed approval credit cards. These specifically designed credit card choices are extremely helpful if the consumer is attempting to build or repair their credit scores. While these offers are borne out of a struggling economy, the logic behind the idea simply rests upon the fact that there is a huge market for the credit card companies to tap into, with millions of consumers in a desperate need for relief in the area of credit approval guidelines.

This much needed relief comes in a few interesting ways, though there is a downside. Guaranteed approval credit cards are generally associated with high annual percentage rates (APRs), high fees and penalties, and lower credit limits than the standard credit card. However, if all terms, provisions and payment requirements are met on a consistent basis, these cards will go a long way in helping the consumer re-establish a more acceptable credit rating, or, as in the case of a person having no credit history, such as a student or new immigrant, these can become a vital tool in the process of building credit from scratch.

One such form of guaranteed approval credit card is the secured credit card. In this case, the lender requires a minimum deposit as a down payment, or security. Simply put, this security deposit less the account processing fees are used to calculate the final credit limit available to the applicant. If a higher credit limit is desired, then the consumer simply deposits more funds into the account. Once this is accomplished, the secured card will perform just like a regular credit card, allowing the consumer access to on-line purchases, car rentals, and even cash availability when needed. The up-side to this form of card is that if payments are made on time and financial dependability is shown, the credit card provider could even raise the credit limit without requesting any additional deposits. Another benefit to this type of guaranteed approval credit card is the payment history is also reported to the credit bureaus, the folks that actually calculate the credit scores, therefore ensuring the consumer is indeed heading in the right direction in re-establishing or building a great credit history. This kind of help is just what the consumer needs, not only to increase their buying power and boost financial confidence and flexibility, but it provides an invigorating shot-in-the-arm for the economy as a whole.