Unsecured credit cards

Unsecured credit cards

Unsecured credit cards are credit cards that are not secured against a property, such as your home.

A credit card works rather like a loan from a bank that you pay back with interest, the only real difference between a standard loan and a credit card is that that loan is available on credit via the card, and ofcourse certain card issuers offer promotions to encourage their customers to select their credit cards, such as air miles, points off grocery shopping, and fuel.

Secured credit cards are obviously secured against your home or property, and since they are secured against your home or property the interest rates are a lot lower than for unsecured credit cards.

Unsecured credit cards are the standard type of credit cards issued by the banks, and usually require a credit check or credit rating to establish and determine if you will be approved for the card and your credit limit.

It should be noted that the banks are usually the ones that issue credit cards to their customers, while the credit card providers such as VISA, Mastercard, Capital One, American Express make their money from retailers utilizing the card, while the banks make their money from the interest rates charged on the card. In some cases the credit card companies are also the issuers, such as Capital One and American Express, meaning they make money both from retailers and from the interest rates, and charges.

Where you have a long history with the bank, an unsecured credit card is the best option to go for, as you can take advantage of low interest rates, some great promotional offers such as air miles and points off grocery shopping which you can redeem as cashback or towards other goods and services, as well as money off gas, and ofcourse they are not secured against your home or property.

In the hierarchy of credit cards, the preferred choices are usually an unsecured credit card, a secured credit card and a prepaid credit card, a prepaid credit card is rather like a debit card, where you only have access to the funds in your account, and are not taking a loan from the credit card, this has provided a very lucrative avenue for many providers as people with bad credit tend to be approved for only this type of card, and they still have to pay a monthly usage fee, as well as not being given a credit line.

Visit Debt consolidation for some great consumer credit counseling services, and dealing with credit card debts in general.

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