Secured Credit Cards versus Unsecured Credit Cards
Secured and unsecured credit cards can both be used to make various purchases. However, secured credit cards require you to open a savings account in order to act as security, for your line of credit. Unsecured cards do not require you to open a savings account. The required savings may vary from company to company. Your credit line then becomes a percentage of the savings in your bank a/c. The bank will pay you interest on the savings. There would be additional fees and a higher rate of interest levied on a secured credit card than an unsecured credit card.
Unsecured credit cards have fewer restrictions than the secured ones. They also require no deposit in a bank. Secured credit cards are generally issued to someone with a bad credit history. Companies are willing to issue a credit card to people with bad credit, as long as they have a savings account attached to the card. This essentially works like a pre-paid credit card. This means that the risk associated with issuing a card to someone with a bad credit history is greatly reduced. Companies allow you to make a deposit in various ways to your credit card. You can directly deposit from your salary account to the card or through a bank machine or even through Western Union. If over time, you can maintain a secured credit card well, then you could be automatically issued an unsecured credit card.
But you should exercise caution when looking for a secured credit card. Ensure that you have chosen a credit card, issued by a reputed company. There are many scams that can take place with these cards. Especially be wary of offers of easy lines of credit. No one can guarantee you credit.
There are various parameters that have to be checked before you can apply for a card. A 900 number may not be free. You may be asked to call a 900 number to apply for your credit card. Soon you may be charged up to 50$ for the call and then even refused the card. Beware of credit repair companies that claim to clean up your credit history for a fee. You can clean up credit history for free. You only need to ensure that the issuer reports your secured card to the credit bureau. You are now on your way to cleaning up your credit history. Remember to find out what additional charges will come up.
If you decide to go in for an unsecured credit card, shop around for the one that gives you the most benefits. This is just like a normal credit card. It will have a lot more features like balance transfer, cash back, and other options. Use this card wisely to maintain a good credit rating. No matter what credit card you opt for its important to get one that is suitable to your needs.