Secured and unsecured credit cards are known to be two different kinds of credit cards, one card is handed out upon a deposit, and the other does not possess such provision, and the credit restriction may vary. The utilization of plastic cash may have boosted exponentially in the Western planet in current periods, and barely anyone holds money with himself, choosing to make expenses using his credit cards. However, this over-dependence on credit cards has also generated difficulties for individuals. They have begun to create disproportionate costs via credit cards while monetary diplomacy dictates that these cards should be utilized sparingly and for essential payments. Excess expenses and poor spending has implied that a preponderance of individuals is currently holding enormous balances on their credit cards reimbursing huge stake each month to the providing firm. Though this means additional funds for credit card firms, there are also worries among credit card firms about losing their lead sum. This resulted in the expansion of secured credit cards—the only difference between secure and unsecured credit cards and what these differences imply to the users.
What are Secured Credit Cards?
The notion of secured credit cards was presented to overwhelm the difficulties of most individuals with poor or no credit records. With the number of individuals opting for credit cards boosting exponentially and the utilization of credit cards becoming commonplace, credit card firms had to negotiate with uncountable involvement from individuals with bad credit records. As credit card firms provide cards to those clients who are credit respectable based on their credit records, it became tough for those firms to deny registrations of individuals with poor credit records. Therefore, they opted for a creative concept of secured credit cards. To acquire a secure credit card, an individual must pay in funds with the credit card firm and fix a restriction for himself. These cards are perfect for individuals with no regulations over their expenses addiction since they do not need to bother handling the balance on their credit cards.
What are Unsecured Credit Cards?
As the name indicates, these cards are not secured, which suggests that no cash is paid to the credit card firm to profit from them. As such, firms choose to permit their utilization just for people with an excellent credit record and a tremendous track history of timely reimbursement. This kind of individual also possesses higher credit restrictions at a reduced APR than an individual with a secured credit card. Though the client has to reimburse the bills every month to the credit card firm, he has the choice of reimbursing in total or holding the balance to be refunded later, enticing stakes from the providing firm.
Difference Between Secured Credit Cards and Unsecured Credit Cards
However, the difference between secured and unsecured credit cards is very evident, with secured cards being provided to individuals with bad credit records and unsecured credit cards for individuals with a tremendous credit score. The other bonuses involve reduced annual payments and APR for individuals possessing excellent credit points. These individuals commonly have an increased credit restriction on their cards than those with decreased or poor credit. There is no advance fee for individuals with good credit records, and they must reimburse a monthly membership payment, which is waived on several occasions. As secured credit cards offer an opportunity to individuals with a bad credit record to fix their points and return on track, even individuals who have gone through bankruptcy are using these cards. However, these cards hold an increased stake and need funds to be paid.