Unsecured Credit Cards
What Are Unsecured Credit Cards?
Most credit cards are unsecured. This means that you don’t need to pay a security deposit to take them out. They are offered by almost all banks. Annual interest on these cards generally ranges from 12%-27% interest, depending on the card and your credit history.
Getting an unsecured credit card normally requires going through an application process. Banks will usually check your credit history and will also consider your income during this process.
Who Can Get Unsecured Cards?
Generally speaking, anyone with a solid credit history can easily get unsecured cards. However, those you have bad credit will have more difficulty in getting approved for them. Secured credit cards and prepaid credit cards are a great option for those who can’t get approved for the unsecured type now. Secured cards require a security deposit but can be useful in improving credit history. Once your credit history has improved it will be a lot easier to get approved for an unsecured card.
Who Provides Unsecured Cards?
Almost all major banks provide these cards. Typical examples of banks that provide them are Wells Fargo, Capital One, American Express, Citibank, HSBC, Bank of America, among others. Most credit unions also offer unsecured cards. Chances are that the bank where you have your checking account can offer you a card of this type.
What Fees Are Associated With These Cards?
There are a few different fees that you may see with these cards. Here’s the short list: annual fees, interest, application fees, processing fees, monthly fees, among others.
It is crucial that before you take out a card, you do ample research on it. Never take out a card unless you fully understand every single fee that’s associated with it. People often take out cards only to find that they have ridiculous monthly fees or excessive interest. Doing your research beforehand will really help you to understand the costs of each of your credit lines.
Are These Cards Smart To Use?
As a general rule, these are the best credit cards to use. They usually have better interest rates and structures for fees than other types of cards. However, other cards are also useful for people that qualify for cards of this type.
The most important aspect of any type of credit is to manage it properly. People often get themselves into trouble by running up their lines of credit and this mistake must be avoided if you want to keep your finances in check.
Using these cards can be really useful for building credit history – IF you use them properly. You need to keep the balances on your cards below 30% of your available limits for optimum credit building.