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An
unsecured credit card is one that does
not require the cardholder to make a security
payment or deposit in the form of collateral.
Your qualification for such a credit card
is therefore usually based on your credit
history and financial status and the credit
card company's assessment of your ability
to make repayments on time. Because unsecured
credit cards are generally intended for
those with a positive credit history,
the interest rates are usually lower than
what one can expect for a secured credit
card.
Most
companies will issue unsecured credit
cards to credit worthy customers. Visa
and MasterCard are the two most convenient
types of credit card because they are
the most commonly used and accepted cards
worldwide. Other credit card companies
such as American Express issue cards that
are less commonly accepted because of
the rates at which they charge merchants
for their services.
Each
credit card company will have different
requirements to issue a person with a
certain type of credit card; different
types of credit card may be offered based
on the financial status and credit rating
of the customer. The most distinguishable
feature between different credit cards
is the interest rate; generally, the worse
a customer’s credit rating, the
higher their interest rate will be. A
common marketing feature and incentive
is the low introductory annual percentage
rate for an unsecured credit card that
a number of companies will offer new customers.
It is important to understand that these
low rates have limited duration and it
is therefore advisable to find out how
long the introductory rates last until
the fixed annual rate kicks in. This information
is usually readily available from the
credit card terms and conditions, which
should be studied carefully.
The
credit limit to which you are entitled
for an unsecured credit card varies according
to your financial status, but regardless
of this, it is important to exercise shrewd
personal financial management when using
an unsecured credit card. Because there
is no collateral secured, your debts can
easily mount up, and adversely affect
your credit rating if not dealt with properly. |
Unsecured
Credit Cards
Unsecured Credit Cards