Definition Of A Secured Credit Card
First off, what is an unsecured credit card? Well to understand the answer we
must first ask what a secured credit card is. A secured credit card is a card
where you have to open up a savings account through a bank that specifically
holds money to pay for any credit card billings if you cannot pay for you debts
within the terms and agreements of the credit provider. This means you have to
have your own money tied up in a savings account to prove to the credit lender
that you can handle a line of credit. It secures the lenders money by tying up
your money in an account. These are only useful if you have to re-establish
your credit or if you are trying to build credit. They typically have higher
interest rates, have an annual fee and have a requirement of how much money
needs to be in the savings account for you to have a line of their credit.
These cards have their place, but only apply for them if you cannot qualify for
an unsecured credit card. Word to the wise; only apply for a secured credit
card that reports your information to the credit bureau. This is the only way a
secured credit card can help you to build a positive credit history.
Definition Of A Unsecured Credit Card
An unsecured credit card is a card that gives you a line of credit without you
having to prove payment based on a savings account. So basically the credit
cards most people think of is considered an unsecured credit card although we
don’t typically define them with that specific term. The idea is that the
lender feels that you have credit worthiness and that their money is safe in
your hands and it will eventually be returned to them. Now and days there are a
variety of unsecured credit card providers that will give you a line a credit,
even if you have had bad credit or no credit in the past. You will want to try
for these cards first, because there is fewer fees involved then a secured
credit card and you will not have to wrap up your money in a savings account.
What Is An Offshore Unsecured Credit Card?
An offshore unsecured credit card is considered a scam, so watch out. These
"companies" say that they will give you a non-US unsecured card to help
re-establish credit for people who have a less then stellar credit past. They
lure you with an automatic line of credit and a sense on instant gratification.
They make you pay an initial start-up or membership fee, which inevitably goes
into their pockets while you never receive a credit card. Or, they will take
down all of your "private" information and use it to open up credit cards in
the United States under your name and run your credit into the ground without
your knowledge. So now you have to prove that you were involved in credit card
fraud while trying to clear your name, which could take months or years. To
play it safe, stick with companies that you know are reputable and always make
the contact first, never give information to someone who contacts you.