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Ask Creditnet: Secured Credit Cards and Interest Rates

credit cards Dear Creditnet: I have interest in applying for a secured credit card. I found one that I really like and it says that for every 3 months I pay my bills on time my interest rate will be reduced. The confusing thing is that there is also a 7-month 0% APR period. My question to you is will my interest rate be reduced during that 7-month introductory period as I make payments on time?

Answer: It's difficult to answer this question with absolute certainty since you haven't provided the name of the specific secured credit card, but my best guess is yes - the regular interest rate that will kick in after the 0% promotional period ends can still be adjusted downward during the first 7 months of timely payments.  I recommend calling the credit issuer and asking this question before you apply for the card, just to make sure you're clear. Now, your question also brings up a more important point that needs to be made.  Why are you worried about ongoing interest rates when comparing secured credit cards? The purpose of using secured credit cards is to provide you with an opportunity to safely access credit and rebuild your credit history, not carry balances.  In fact, if your plan is to use a secured credit card to carry a balance of any kind from month to month, you're not ready to use a secured credit card.  Stick with cash or your debit card until you're ready to commit to paying credit card balances in full each and every month. All ongoing interest rates for secured credit cards will be ridiculously high anyway (20%+), even if you do receive quarterly reductions in your rate for on-time payments.  Instead, what you should be comparing are setup fees, annual fees, and whether the credit issuer will report your payment history to all 3 major credit bureaus. To compare the best secured credit cards in the marketplace and apply securely online, check out our expert reviews in the Secured Credit Card section.

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Joshua Heckathorn's picture

Joshua Heckathorn is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past twenty years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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