Brief Guide About What Is An Unsecured Credit Card

| November 5, 2011

You may have seen it on various ads, on the TV or flyers, or some posters that you have seen somewhere. Now you are really getting intrigued about what is an unsecured credit card. When it comes to finances, all you would really want to have is security, so why would you get an unsecured one? You may want to try asking around and you will be very surprised that there are actually many people who have this type of credit card. Despite the name, this allows you to be in control of how much you will spend depending on how much you can afford to pay.

How does this work? The credit card doesn’t have any security deposit account linked with it, hence the name. Whenever you use the card to spend, you agree to the terms that you will pay the credit in full when it is already due. You can get one by applying on a trusted credit card company that will check your credit history and will base the credit limit on its results. If you have a high credit score, your credit limit will also be higher.

Using an unsecured credit card is very similar to being approved for a loan. Once you have received the money and used it, you are given until the next due date to pay for the total amount that you have used. This is also testing your financial capability and management because the history such as how you spend, how you pay, how often did you miss payments and the likes will be taken into consideration by financial companies to assess your credit score. You wouldn’t want to have a bad reputation because this will affect your future transactions and applications for credit and various kinds of loans. It may take many years to repair a bad credit background, so while you can still manage the situation, you better keep a good financial standing as much as you can.

Category: Credit Cards

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