Secured credit cards: Useful for booking travel?

[BCA2009]

Anything a secured credit card can do a debit card can do. People brought up Dave Ramsey....the dude travels all around the country and runs a multi-multi million dollar business with a debit card. If he can do, certainly we can.

I guess though if you feel the need to have a CC, secured is the way to go. Fees or not, at least you can't get back into trouble.

The problem with using debit cards for travel is that they usually put a large hold on available funds to ensure you have enough in the account to cover possible charges. For example, you may want to rent a car for one day and the cost is $60. The company may "authorize" $500. They don't actually take it out of your account, but it is frozen and can't be spent anywhere else until the authorization expires. Hotels do this also. The big problem is the the "authorization" could take days, even a week to unlock your funds, even if you settled up on the same day you rented the car.

I imagine Dave Ramsey has enough cash in his checking account that he isn't worried about a $500 hold on some of his funds, but most of us don't have that kind of cushion in our accounts.

Side Note: I admit that I know virtually nothing about Dave Ramsey, but I would wager that he doesn't run his entire organization without using any credit. I know alot about business operations and it is almost impossible run a good business without some types of credit. Microsoft may have between 20 - 40 Billion dollars in cash on hand at any given time, but they still use credit for alot of transactions when it makes good business sense.

[momtoroxy]

My biggest fear is my medical situation. If I need a $200 RX and don't have the money, I am up the creek! We were discharged last month and have not used credit since. But in the BK process DH lost his job and is now working a sales job that pays 1/2 of what the old salary did. He will eventually make comission, but it takes time.

On another note, my husband has worked for 2 of the major rental car companies, and some put a hold of up to $400 in addition to rental fees, depending on how long the rental is. We used debit at a hotel, and I think they only held $100. I figure if we are going to travel, we have enough saved to do so, and will have the room for the hold on the card. But, the doctor fees and RX fees are really worrying me, as I can't NOT take my meds! Time will tell!

[flyinbroke]

The debit holds can bite you in the ass; I had a hotel bill hold three times what I spent, and the credit union proceeded to charge me overdraft fees based on the charges that were part of the hold! The gas stations and grocery stores slap a dollar hold on you which is no big deal. It is the hotels and rental car places that may screw you up.

This is the reason many business travelers would rather have a CC than a debit card. For those who use debit, Alamo (I think all branches) does take them without question. So does National.

[moneytrouble]

If you must rebuild your credit I am sure better ways exist.

According to most websites I have come across, they suggest secured credit cards. If this is not the only way to rebuild your credit, can someone please post other ways since they supposedly exist.

[mtbc]

Car loans, credit-worthy co-signers on any credit, secured bank "loans" (they do exist), or secured credit cards, are the usual ways I see mentioned. With things like car loans, though, there'll be high interest with bad credit, so I'd start out with lower-balance shorter-term things just to get some steady payment histories recorded without incurring too much in risk premium and fees. Basically: only borrow what you could afford to immediately repay, and optimize for engineering your credit report.

Personally, I'll probably go with secured credit cards and eat the annual fees. Not everyone who goes bankrupt has credit card issues (no card I was the sole "name" on had any balance on it at all when I filed so I didn't even have to list them on Schedule F) and with travel stuff (cars, hotels, etc.) I see enough reports of trouble when people try to use debit cards that, even if most places are fine, I'd like to live without that worry, travel often comes with enough inconvenient surprises as it is.

(What really kicked us into bankruptcy was unexpectedly having to relocate from a house that was worth not much over half we owed on it. There was a bunch of old medical debt too that I was glad to be rid of from back when our insurance was patchier.)

[MrOwlEye]

I'll probably get a secured credit card through my bank, HSBC. Unfortunately I won't be able to add to the initial deposit when I get more funds in the future (they won't let me), but at least I'll be able to book travel (everywhere) without all these holds on my debit card.

Yes, I'm sure Dave Ramsey continues to be a beneficiary of credit in some way or another. For travel he may well be using a company issued card (from an employer).

You really can't move efficiently through the world of business without a credit card.

[LSUTiger32]

I am rebuilding my credit with my school loans and my car that I reaffirmed. They are all reporting postively to the bureaus. Why do you NEED to rebuild your credit? Time will heal a lot of it and you can get a home loan according to the FHA guidelines if you have rebuilt credit OR you have decided NOT to incur new credit.

[backtoschool]

I am rebuilding my credit with my school loans and my car that I reaffirmed. They are all reporting postively to the bureaus. Why do you NEED to rebuild your credit? Time will heal a lot of it and you can get a home loan according to the FHA guidelines if you have rebuilt credit OR you have decided NOT to incur new credit.

You need 3 positive trade lines reporting to secure a home loan.

Plus you need ficos over 620.

Some people cannot get to 620 without rebuilding their credit.

I have 3 credit cards, a car loan and my student loans reporting and my ficos are in the high 600's at this point. I don't want the credit cards, and I only use them to establish a spending pattern, but they are definitely helping my score, which will help me get favorable rates on a home.

[Michigan1951]

I don't give a crap about my credit score either. Amen to your post, Dannmcg 357.
I'd rather struggle to save up cash, than to have credit card debt learking at my back again.