6 Questions and Answers About Unsecured And Secured Credit Cards

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The meaning of Secured Credit card, may not be obvious by its name. It is a credit card that you get only by giving the card company a cash advance deposit that allows you to use credit only up to the cash amount you deposit. This does not involve security such as property or household goods. It's a cash deposit only. This guarantees the company their money if you fail to make your credit card payments. Your money remains in escrow as that guarantee.

Secured credit cards are designed for people with spotty credit history or for people seeking credit for the first time. These are people who may not meet the tougher requirements for a standard credit card that does not require cash up front. With an standard credit card, you are not required to put up any collateral such as property or household goods. Most standard credit cards are unsecured instruments and, because of this fact, they will command higher interest rates. Collateral instruments are mortgages and auto loans, for example, where the home or auto can be taken if the payments are in default.

Here are the top 6 questions and explanations about these two types of credit cards:                                                                                                                                       
1. What Do I Need To Get An Unsecured Credit Card?

Credit worthiness varies from company to company. You will need to satisfy some basic requirements.

These cover residency, legal age, a verifiable Social Security number, a steady job that pays a salary or hourly wage and not a commission only job. And, of course, your credit score must be above a level that makes you a good credit risk.

2. Can They Change My Interest Rate?

Resetting interest is a legal tool that can be used by the credit card issuer. If you miss payments, your interest rate can be increased by the card company.  Read the fine print of the issuer's offer and you might be shocked at what can happen. Consider the annual fee, finance charges, how they compute the interest rate, if there is a grace period for payments on purchases, cash advances, and balance transfers. All these fees and charges will add to your obligation and can affect your monthly payments.

3. Why Do Credit Card Companies Charge An Annual Fee?

The Annual Fee is another tool used by card companies to offset their costs of managing your account. At least that's what they say. Regardless, you have to pay it if you accept the terms. Be aware they will charge you the annual fee regardless of how much the card is used, if at all. It's a good idea to cancel cards you are not using.

4. What Other Costs Should I Look For?

Really pay attention to what the fine print spells out because most credit card issuers charge additional fees for cash advances, late payments, and if you go over your maximum credit limit. Fees are disclosed in the Terms and Conditions. Read this information carefully because you are entering into a legally binding contract.

5. Am I Protected From Credit Card Fraud?

Most card issuers have security in place to protect you but you cannot depend solely upon such protection. It is a good idea to sign up for a credit monitoring service. It's not a lot of money to protect yourself from credit theft, believe me. These services do a good job of keeping an eye on your credit and reporting to you the instant something seems wrong. In addition, many services provide free credit reports so you can monitor activity and catch anything that is suspicious. You will get free credit tips, too.

6. How Safe Is It To Use Credit Cards Online?

It is safe to say that all reputable credit card issuers online operate highly encrypted sites that keep hackers away. Hacking still takes place but these companies protect you from financial disaster by investigating on your behalf and correcting charges made without your permission. Look for a padlock symbol in your browser that will indicate the site is secured by encryption that thwarts hackers. However, make sure you are dealing with a company that has a good reputation. Just Google them to find any complaints.

Secured or Unsecured credit is the question you must answer for yourself. Visit the Free Credit Report Scam blog for free videos, articles, and discussion forum. It's all free information and no signup for anything. Debt Management will keep you out of trouble when you have the right answers. Be prosperous!

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