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When we talk about credit cards, there are two different types that are out there for the consumer: secured and unsecured credit cards. Knowing the differences are essential when you’re deciding on what kind of credit card to get. Confused about the two? We’re here to help. Here’s our guide on the differences between secured and unsecured credit cards.
Here’s what you need to know: a secured credit card is backed by some amount of cash that the bearer will need to provide. So, a person who wants to get a secured credit card would have to put up a set amount of money up before the card. That amount of money will be the credit limit.
On the other hand, an unsecured credit card doesn’t have any up-front cash that comes along with the card. The limits are set by the lenders that assign the card. That credit limit will come after those companies analyze the requester’s background.
A secured credit card is ideal for a few different situations:
On the other hand, an unsecured card is the way to go in most other situations. While secured credit cards offer those perks detailed above, they frequently come with higher fees to the consumer. Additionally, the limits on a secured credit card are generally much lower than the ones you would get on an unsecured one. Unsecured credit cards will also offer bonuses (air miles, cash back, etc.) that most secured credit cards do not.
Before deciding on what type of card to get, be sure to take a look at all the options available. Take a look at your credit score and financial history, and examine very carefully the pluses and minuses associated with each card available. Going with the right credit card is an essential part of having a stable and successful financial foundation.
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