Q's about secured credit cards

[MrOwlEye]

Hi all --

My debts were recently discharged, and as part of rebuilding my credit I'm going to get a secured credit card from my bank.

Since I'm a freelancer who sometimes must incur travel expenses upfront, I want to find out the usefulness of a secured credit card in booking travel.

This will help me decide the amount I should deposit to open my account (which I realize is inflexible once I open the account; i.e, in effect I won't be able to raise my credit limit by depositing additional funds).

RENTAL CARS: I can't make out from several websites whether rental car companies accept secured credit cards to create a reservation. Hertz says they won't accept "prepaid" or "stored value" cards. And I know most locations (esp. the kind of heavy biz-travel places I'd be most likely to go) won't accept debit cards.

HOTELS and AIRLINES: Anyone know about the usefulness of debit cards and secured credit cards for booking with these guys?

Thank you,

MOE

[teacher]

Secured cards are only "secured" as far as the lender knows. The rental company has no way of knowing if it is secured or not. It is a credit card. It is NOT a prepaid credit card.

[MrOwlEye]

Thank you, teacher. That's good to know.

[WaitNSee]

Debit Card with Airlines

I have never had any problem using a debit card to make reservations with an airline, mostly fly Air Tran.
Car Rentals may vary, but Dollar and Enterprise want Credit cards.

[viking64]

Alamo and Hertz seem to be OK with debit cards, more-so Alamo, though. I think Hertz varies by location.

As far as secured cards are concerned, many programs let you increase your credit limit by depositing additional funds into the account securing the card. Sometimes it's in higher increments, like $500 each time. It depends on the card.

I'm in a similar situation as you. In order to have enough to use for car rentals and not have a high debt to credit ratio, I'm likely to wait until I can do $1000 on a secured card, though I $500-$600 might be all I ever need. You can always use the card to pick up the car, and then pay with debit upon return.

On a side note - I'm about to embark on 9 weeks of travel in South Africa arranged solely with debit cards (airlines, car rental, lodging). It takes some research and planning, but it can be done.

[MrOwlEye]

viking64 -- Thanks for the reply.

I agree, it does appear the debit cards can cover most things -- but it really depends on the location. And unfortunately in business I don't always have a choice. Business is all about speed and convenience first.

I'm fascinated that you found a secured card in which funds may be added periodically. (My bank, HSBC, laughed at me when I asked about this, and said there's no such thing.) So please tell me: What company does this?

Thanks again

MOE

[backtoschool]

I answered your post in the other thread. Here is the link.

http://www.bkforum.com/showthread.php?t=52623

There are pros and cons to both debit cards and secured cards, but I think secured cards are a better way to go.

[justbroke]

[QUOTE=MrOwlEye;382503]RENTAL CARS: I can't make out from several websites whether rental car companies accept secured credit cards to create a reservation. Hertz says they won't accept "prepaid" or "stored value" cards. And I know most locations (esp. the kind of heavy biz-travel places I'd be most likely to go) won't accept debit cards.[.QUOTE]I use a debit card at all the major airports. I just used it in Fort Lauderdale. I have also used it to rent from Hertz in (Charlotte) North Carolina, (Providence) Rhode Island, Orlando (Florida), (Boston) Massachusetts. I've also used a debit card to rent Rider trucks.

The only thing is, that they take an additional $200 of deposit on top of the estimated rental. I was told by Hertz, that this is done regardless of what type of card it is (debit or credit).

HOTELS and AIRLINES: Anyone know about the usefulness of debit cards and secured credit cards for booking with these guys?

Airlines will take a debit card because you're paying for the item right there. They aren't taking a "hold". Now, on the other hand, hotels are taking the debit card "in advance" of payment (because they generally charge at the end of your stay). Because of this, some Hotel chains are warning people that they take an additional hold for each night of stay, and some properties will even take an additional $100 hold on a debit card.

That has been my experience.

[dscurlock]

my secured card just says AppliedBank - Platinum
it looks just like any other credit card, and if I want
to add more funds, then I just send them the min
amount that will increase the limit of the card which
I think the min increments is $100

[MrOwlEye]

BTS -- Thank you. On one hand, it sounds like a secured credit card with a healthy limit (at least a couple thousand dollars) is the way to go for business travel.

But here's the rub: Rebuilding credit (the big virtue of secured cards) means paying off the whole balance each month. Right? But when it comes to incurring business expenses --as a freelancer, anyway -- the fact is that my clients won't reimburse me much faster than 60 days if I'm lucky.

So I think I'd be better off using secured cards to BOOK travel, and (when possible) using a debit card to PAY for travel. Meanwhile I'd use my secured card for minor expenses (e.g., groceries) that I can pay off in full each month.

Given that approach, would a high limit on the secured card still be a virtue? (I'm sure I'd need enough "wiggle room" on the card to enable me to book anything to begin with.)

[teacher]

Again, just to make it clear. A secured credit card is a credit card. The only person who knows it is a secured card is the bank. The account is the same as any credit card account sans the extra "savings" security account.

[MrOwlEye]

Thanks. Did you apply online to get the card? Or is this where you keep your checking/savings account also?

my secured card just says AppliedBank - Platinum
it looks just like any other credit card, and if I want
to add more funds, then I just send them the min
amount that will increase the limit of the card which
I think the min increments is $100

[MrOwlEye]

justbroke -- Thanks for that information. The picture is gradually getting clearer....

[backtoschool]

BTS -- Thank you. On one hand, it sounds like a secured credit card with a healthy limit (at least a couple thousand dollars) is the way to go for business travel.

But here's the rub: Rebuilding credit (the big virtue of secured cards) means paying off the whole balance each month. Right? But when it comes to incurring business expenses --as a freelancer, anyway -- the fact is that my clients won't reimburse me much faster than 60 days if I'm lucky.

So I think I'd be better off using secured cards to BOOK travel, and (when possible) using a debit card to PAY for travel. Meanwhile I'd use my secured card for minor expenses (e.g., groceries) that I can pay off in full each month.

Given that approach, would a high limit on the secured card still be a virtue? (I'm sure I'd need enough "wiggle room" on the card to enable me to book anything to begin with.)

If you don't pay off the balance each month on a secured card you will incur interest, which is an extra expense for you.

but....

As long as you keep the balances low relative to your credit line, you should still see a fico jump.

The benefit to the large line is if you ever want an unsecured credit card. Credit issuers (especially credit unions) will often base your credit line on the largest or average size of your other credit lines on your credit reports. If you have a bunch of $300 credit lines, then a 10k line is not in your immediate future if the credit grantor uses this method as part of their algorithm for determining your credit limit. But if you have a secured card with a decent sized limit, then you will get a larger credit limit from banks that use your existing credit limits as part of their determination.

For me, I am just trying to have a few positive, open, tradelines so that I can get favorable rates on a house in a couple of years. I also want a card with a decent credit limit for business travel, since amex will never grant me credit again until I reincarnate in my next life.

[jadams]

I've done it at several locations, and been told it's company wide, but Enterprise will rent on a debit card -- in my experience it was an additional $150 charged at rental, refunded when returned.

The desk agents said they used to do authorizations/holds but too many people complained about pending charges and the like, so they made it an explicit charge you sign for and get refunded later.

Much also depends on the calibre of hotels you stay in. La Quinta is convenient and cheap to many of the locations I travel to for business. They don't charge your card when you book online. They swipe the debit card at check in, but I've never gotten any charge or hold until check out.

But when I stay at one particular Courtyard Marriott -- they authorize at check-in for the room charges plus $100 a day.

I dislike using a debit card for air travel only because it seems like most of the time I travel there's something "wrong" with some part of my reservation that involves rapid fire typing by the counter agent and an eventual "you're all set Mr. Jadams here's your boarding pass" -- but when I check my bank account for whatever reason there were multiple authorizations to my debit card as he/she reconfirmed through the various screens.

If I had been using a credit card without an excessive limit, there still would have been pending authorizations, but hypothetically it couldn't have cause me any overdrafts and I'd still have cash if necessary.

The same with hotel preauth's, etc. -- they still happen with credit cards, so if you have a small limit they can still pose a problem, it's just not your cash fronting the hold it's your available limit.

But if you were in the middle of a trip and your hotel dinged your credit card for the charges plus $100 a day, that could leave no available credit for the rental car to put a $500 preauth, etc.