Secured credit cards: Useful for booking travel?

[MrOwlEye]

Hi all --

(I apologize for re-posting, but things are pretty quiet on the Rebuilding Credit forum where'd I originally posted this, so....)

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

[Dannmcg357]

I attended a Dave Ramsey class prior to filing BK (yeah, I know) and he swears you can rent cars and book hotels with VISA debit cards because he is ANTI CREDIT CARD. I sometimes travel for my job too so I don't know how Im going to handle this either.

[MrOwlEye]

My best friend strongly recommends that I read Dave Ramsey to address all my money questions and concerns, but I haven't got around to it yet. (Did you like the class?)

Dumb question: Would a Mastercard logo work as well?

This afternoon I started calling various locations of car rental places and am receiving different answers. My research has only begun.

For example, Enterprise (a specific location, the only one I've spoken with for that brand) says they will rent to me with a debit card as long as I bring in several utility bills to prove my address....

[Backlyn]

I have used my debit card as a credit card to book hotel rooms. I did it in NYC and in NJ. NYC hotel put a $100 hold on my debit card for a week but credited it as soon as they verified I did not wrack up any extra charges from my stay. Unless you don't have the money to put up front, I would use your debit card as a credit card.

[yomann]

If your debit card has a MC or Visa logo on it, it doubles as a credit card.
Only difference is charged amounts are immediately taken from your account, and you don't get the 30 day float.

[Shawshank]

A secured credit card (where your credit limit is the amount of money you have in deposit as security) will be treated the same as a regular credit card. I don't think any merchant can see the difference. Look at your debit card, it says "debit card" or "check card" somewhere on it most likely. A secured credit card would look just like a regular credit card and be processed as one. That is my plan as well, not only to build a little credit, but for times when it is truly needed. The beauty of a secured card is that you will always have the funds to pay it off ;-)

[Dannmcg357]

I have heard the account # can reveal the difference. Would have to be a more up to date and system to recognize the difference. Need a geek to help here!

[OhioFiler]

If your debit card has a MC or Visa logo on it, it doubles as a credit card.
Only difference is charged amounts are immediately taken from your account, and you ... get the 30 day float.

This credit philosophy has landed a lot of folks in bankruptcy!

[Dannmcg357]

MrOwlEye,
Sorry for not answering sooner. I did like the class and I feel it is a good program. Not sure I agree with every thing he sais regarding dealing with creditors. Dave is pro saving and anti credit card. He also advises against BK. What I took away from the Dave Ramsey classes were worth attending. 7 steps:
1. $1k Emergency fund
2. Pay off debt using debt snowball
3. 3-6 mo. expenses savings
4. Invest 15% of income to IRA
5. College funding
6. Pay off home early
7. Build wealth and give

1-4 and 6 will change your life if you follow them. But not much point in fixing the gate if the horse has already ran off, such as my case. But I follow them now.

[MrOwlEye]

Thanks for the response.

It's interesting, all the money advice always boils down to one idea: Save tons of it!

It's great advice...WHEN your income significantly exceeds your expenses. Otherwise when I hear someone say I should save 6 months of living expenses, I have to laugh.

I understand Mr. Ramsey advises against BK. I also understand that he did it himself.

MrOwlEye,
Sorry for not answering sooner. I did like the class and I feel it is a good program. Not sure I agree with every thing he sais regarding dealing with creditors. Dave is pro saving and anti credit card. He also advises against BK. What I took away from the Dave Ramsey classes were worth attending. 7 steps:
1. $1k Emergency fund
2. Pay off debt using debt snowball
3. 3-6 mo. expenses savings
4. Invest 15% of income to IRA
5. College funding
6. Pay off home early
7. Build wealth and give

1-4 and 6 will change your life if you follow them. But not much point in fixing the gate if the horse has already ran off, such as my case. But I follow them now.

[frogger]

Many of Dave's ideals are good, just don't drink the kool-aid..........

[flyinbroke]

Dave has great ideas. Too bad he did not use them himself; he filed BK. He would have seen that, in many cases, his ideas will not work. Once you are on steady ground, they will.

[backtoschool]

Here are the main differences between a secured credit card and a debit card in my opinion:

1. A secured credit card will help you rebuild your credit score as it will report to all three credit bureaus. This will allow you to get better rates for a car and/or a house sooner.

2. A debit card will hold money from your checking account until your charge clears. For rental cars and hotels, the company will hold more than the charge, and may take several days after the charge to release the hold, thereby causing overdrafts, if you keep your checking account balance tight.

3. Secured cards will charge you an annual fee and interest for the use of your own money. Some people cannot stomach that.

4. The more you use your debit card as a visa/mastercard, the more risk you run that someone will get the number, and through fraud clean your account out. At least with a secured card, the risk is protected, and is only for the amount of the card. Banks will pay back unauthorized debits, but sometimes it takes weeks or even months for them to sort it out.

For me, for things like business travel, I would rather have that money get charged against a secured card, then go in and out of my checking account with no rhyme or reason as to how much the hold will be, and for how long the hold will be placed on my account.

Also, if you can afford a secured card for a larger amount (several thousand at least) then that will report as a large limit on your credit reports, much larger than you would get in an unsecured card right out of bankruptcy. The larger limit on your reports will allow you to get other cards with larger limits faster, if that is your end goal.

[Michigan1951]

Personally, I feel sorry for anyone of us here that has to be forced back into using credit cards only to have a high credit score. Yes, when you have a job and it requires traveling, a credit card sounds like a must. And, then there are those that have young families that have to build up a credit score using cards again so they are able to buy a home, etc. Others, like me, are older, now wiser, and swearing off a credit card debt period and using cash from here on out because I do not have a need to have a high credit score for a home, car, or anything else. I am done with being a whiping post for the credit card companies.

If a person that is just coming out of BK is already starting to fool themselves that they have to have a credit card, is lying to themselves, as I have done in the past. It is like an alcoholic getting off the wagon to take a sip of beer, and having a hard time climbing back onto the wagon again. That is what the credit card companies are hoping that we mess up sometime again in the future, and most of you will because our economy is not fixed yet, and things are going to get even more difficult for all of us befor it is all over with.

Now is the time to save up, start an emergency fund, practice need over want, and the lsit goes on. I do not have the guts to go near a credit card again, and it is not about will-power or weakness. Some of us had to use credit for medical reasons, but I bet that was not all it was used for. We all need to take a good look in the mirror right now, and say NO to credit cards. Find another way to get around using them period.

Dave R. learned from his mistakes, and is now trying to help us if we would only listen. Some can't follow his information, but some of us can at least attempt it, or we will be right back in the hands of the credit card companies.

I try to re-think what got us to this point of BK in the first place, and even if it was our fault or not, doesn't change the fact that credit card debt is not anything to brag about. I'd take a low credit score due to no credit card on the records, than be so proud to have a high credit score with the good possibility of racking it up again.........

If a bunch of monkeys all lined up and started to follow each other, one by one, over a cliff, then I guess you can say they are foolish to begin with, or it is just part of following the leader...............to where, why, and for what? I have the chance to get off of this credit-go-round with a fresh start. I will die trying to stay clear of the disgusting smell of a credit card in my wallet.

Good luck to anyone that feels they have no choice but to use credit cards from here on out. It is more of an excuse for most of us, and if you are addicted to credit card usage, you will find any way to use one. Lying to yourself is the beginning of serious credit problems all over again..............Nobody takes your hand and makes you swipe the card, but you. Even if you work for a company that you might have to use credit on the road, it is a good EXCUSE to start up again, but there has to be a better way out there than playing with fire (secured, unsecured, or otherwise). I wish all of us good luck in the future, and start our new beginning after BK with our EYES WIDE OPEN.

[MrOwlEye]

That's a very thought provoking post, Michigan1951. It appears that NOT having a credit card is...almost a luxury.