In this fast life everybody knows the importance of credit cards. It is one of the basic things that is almost used by all the adults. It makes you an independent person and you really don’t need to rely on anyone. Nowadays, if you have a credit card you can get a lot of things just by having it. But for that there are some rules and regulations that you need to follow before you apply for your credit card and you should understand as well what exactly the credit cards are. After this you can easily prefer the one you want according to your needs and at the time of help. There are two types of credit cards; secured and the unsecured credit card. A lot of people don’t really know the difference between these two and they just go and apply without even thinking which one is better. Don’t put yourself at risk. Let us just tell you what is the difference between credit cards so it is easy for you to apply.
Secured Credit Cards
Let’s talk about the secured credit cards requirements first. So what is the reason for these cards being called secure?
Cash deposit– First of all, the first thing is to deposit some amount (specified by the bank) while opening it. This amount will be added to your account as the security deposit. The more amount deposited, the more beneficial it will be, it will eventually become your security line. This cash is held by the card issuer, yet it is possibly utilized if the cardholder more than once neglects to make instalments to their record otherwise called defaulting. Once more, it resembles giving the bank cash as security, so if under any condition you don’t cover your bill or on the off chance that you default on the whole balance, they can keep that deposited money.
For example, if you deposited $500 installment on a secured credit card, the credit line will be $500. Each bank will be distinctive on the measure of deposit you can make at first, yet it’s usually somewhere in the range of $200 and $300. Your deposited money just exists to profit the bank if all else fails should you over and over neglect to make instalments. When the balance is paid off and your record gets closed down, the refund will be done right away from your deposit.
Need to give instalments– A secured credit card is similar to a credit card. There is just one difference in these that while getting a secured card you make a security deposit. So you actually need to make scheduled instalments on the card, and in case you are late, you can get charged a late expense, and it will likewise affect your credit. You will get the bank statement each month as well just like other cardholders, and need to make instalments before the due date.
Similar to other credit cards– You can easily use secured credit cards like other credit cards. Only it has a lesser credit line. Depends on the deposit you have made. You have access to your account all the time, you can make payments, can use an atm machine for transactions, use it online through phone and computer.
Builds credit– People who want to get an unsecured credit card, it is the initial thing they are supposed to do. It will help build your credit. Henceforth, as you use the card and make reliable instalments on time each month, acceptable conduct will be accounted for to the credit organizations, in this way developing your credit.
Goal to get unsecured card– The secured credit cards is based on a program through which you graduate to an unsecured card. You can make this work by giving you instalments on time and consistency with good credit. Through this a lot of credit agencies will let you have an unsecured credit card.
A better way to learn your responsibilities– This is the first step to get a credit card, so you learn how to use it and what are the deadlines to pay the instalments, how much you can use, how much credit you can utilize. Since, the credit line is less, so you spent money in a very appropriate way by thinking about the risks at each point. When you are able to get your unsecured credit card, you will be using it more efficiently and responsibly.
Unsecured Credit Cards.
Let’s now talk about unsecured credit cards. Those credit card doesn’t need any security deposit while getting it. It is similar to unsecured personal loan where you doesn’t need to deposit anything. You can only can get this credit card if your history with credit is fine and you are not a defaulter. Your credit line limit will be approved on a monthly basis. Also, the unsecured credit card has a revolving line of credit, many don’t know what this revolving line means. So, revolving line means that the credit line can be accessed anytime and if the credit line is open.
Doesn’t need anything against– To get an unsecured credit card it doesn’t need any kind of insurance. There is no guarantee against the credit line for an unsecured credit card, so the credit card supplier is facing a determined challenge accepting that you will make instalments on the credit and at last compensation the balance back. If you miss any instalments or considered a defaulter, the credit card supplier has the complete right to charge you the late fees and collect the payment from you. The worst part is that it will harm your credit score which will make an issue for you in the future.
Amazing method to build up credit faster and stronger- Getting an unsecured credit line is kind of the best method to build up your credit stronger. Suppose if you can graduate the program and achieve an unsecured credit card, the credit line will get larger, and it will prove to other credit agencies and lenders that you can manage the huge credit line.
In this way, for instance, you may get a credit line of $10,000 to begin, and in case you are reliably utilizing that credit line and making instalments on schedule towards that credit line, other credit banks will see that you are ready to deal with a $10,000 credit limit. So over the long run, the following time you go to apply for an unsecured credit card, they may give you $15,000. After some time, this will help your credit use proportion and eventually you can build up your credit much stronger.
Great deal of adaptability and alternatives with unsecured credit cards– Unsecured credit cards have significantly a bigger number of choices accessible and undeniably more adaptability than a secured credit card. Unsecured credit cards frequently accompany rewards or different kinds of focuses that you can procure by swiping and utilizing the secured credit cards.
Normally the credit card companies make money when you swipe the card, and when you are unable to pay the full balance they pay you interest as the rewards.
With respect to, you can frequently make bigger purchases and pay them back over the long haul since you have a higher credit line. That is in the event that you would prefer not to take care of it in full each month (however I do suggest covering your balance each and every month on the off chance that you can).
You must have better credit to qualify– Much of the time, you need to have a sensibly decent and good credit score, normally 670 or above, is the score through which you can get qualified and get an unsecured credit card. So as soon as you build your stronger credit with a secured card, you can eventually be qualified for an unsecured credit card, once your credit is sufficiently high and begin taking the advantages of an unsecured credit card. There are possibilities for unsecured credit cards with less credit, yet I would suggest beginning with a secured credit card on the off chance that you really have some less credit.
Credit score importance– Before applying you should know credit score. It is the most important thing when you apply for any credit card, financial loan and more. So, you should know how to maintain it and not to set yourself as a defaulter. Once it’s at risk, you will face the problem every time.
In the end, we would like to tell you that secured credit cards require a security deposit if you need it but it is the safest and easiest way to build your credit stronger and faster. Because of the timely responsibility you don’t put yourself in risk and make the instalments on time which also helps you in making a good score which further helps you in future. Unsecured credit cards are risky for people who are less with their credit.
So, whatever credit card you choose at the end of the day you will have to pay your balance off every month, if not then obviously you will be at risk and it will affect your credit score.