Unsecured Credit Cards

By Daniel Wesley

Most working people who regularly indulge in shopping online have a credit card with them. The plastic money, as it is often referred to can be a very confusing and tricky tool to have. It can lead to unhealthy spending habits. It can very often lead to debts as well. But if you have good control over your spending habits, there is no other tool as convenient and expendable as this. When you apply for credit cards, you often come across terms like secured credit cards and unsecured credit cards. But what are they? Have you ever cared to investigate more in detail about them?

Unsecured Credit Cards

Unsecured credit cards are those in which you use the limit of the credit card company to shop. These credit cards have a credit limit that is based on the applicant’s credit history and source of income. It may be quite high or quite low. If the applicant has a bad or low credit score, then the credit card company may choose to refuse or decline his application. If you find that your application for an unsecured credit card is getting declined then you need to review your credit history. Please do not keep applying for more credit cards as each rejected application causes a further dent in your credit score.

Secured Credit Cards

Secured credit cards are exactly what the name suggests. They are secure. In these cards, you open a special savings account with the credit card company. If you deposit $1000 in that account, you have a credit limit of $1000 on your card. These types of cards can also be termed as debit cards, as the money is more or less debited from your account. If at all you default in payments, the money will be removed from your savings account.

Advantages

When it comes to interest rates and charges, you will find much better terms on secured credit cards. Unsecured credit cards are more likely to have higher interest rates. This is owing to the fact that you are borrowing the money from the company. Also, do not be surprised if you find that your application for a secured credit card is accepted more easily than an unsecured one. Owing to the risk factor involved, only applicants with a good payment history and source of income have a good chance of getting unsecured credit cards.

Unsecured Credit Cards For People With Bad Credit History

However, now there are special unsecured credit cards that are designed for people with a bad credit history. These credit cards have interest rates that are much higher than normal credit cards. But they are made with the aim that bad credit history cannot stop anyone from owning a credit card.

What To Look For

While looking for unsecured credit cards, make sure that you do your research. Look for cards that have a low rate of interest. Comparing rates and quotes from a few credit card companies will help you get the best rates possible. Also make sure that you sign up for a card from a reputed credit card company only. Beware of credit card scams that have several hidden charges.

Unsecured Credit Cards There are two types of credit cards. They are secured credit cards and unsecured credit cards. The unsecured ones are more popular owing to the fact that you do not have to pledge any security amount or deposit.