The benefits of using secured and unsecured credit cards

Nowadays, people are getting accustomed to using card whenever they make a purchase. Shopping and paying without cash has been a normal practice today. Credits card is one of the biggest financing product in the world of consumers. There are so many credit card products that one can use in purchasing and the most popular are the secured credit card and unsecured credit card.

Secured credit card is similar to a prepaid credit card since the funds you are using are actually yours and not the issuer of the credit card. Generally, people who apply for secured credit card or prepaid credit card are people with poor credit or unemployed. Prepaid Credit Card spending limit is the amount of money you loaded to the card. There are no interest or finance charges on a prepaid card. With this kind of card, your credit line could be from 50% to 100% of your deposit depending on the institution giving you the secured credit. Closing unnecessary accounts and consolidating your bills to make payments more manageable could be an advantage financially. By not applying for too much credit within a short period of time is another factor that will help in rebuilding your credit rating. Additionally, even though secured credit is like prepaid cards, they do have certain fees attached. Benefits are similar to that of an unsecured credit card, such as usually being paid interest on your balance in the bank, using Automated Teller Machines to make deposits, withdrawals, and making purchases at participating merchants.

While the unsecured Credit Cards are issued to individuals with good to excellent credit rating. Credit ratings depend on certain criteria, such as one’s ability to repay loans. These criteria include payment history, employment history, and financial stability. Individuals with excellent credit will most likely receive a lower interest rate. A major factor in maintaining excellent credit is making your loan payments on time thus avoiding late fee penalties. Making payments on time will strengthen your credit rating. Unsecured credit cards have numerous advantages such as low-interest rates, high credit limit, business name options, and no annual fees. Closing unnecessary accounts and consolidating your bills to make payments more manageable could be an advantage financially. By not applying for too much credit within a short period of time is another factor that will help in maintaining a good credit rating.