What is an unsecured credit card?

Unsecured credit card is a card that is not connected to an economical account. Most card holders in the United States have at least one unsecured credit card. They are basically approved loans that allow one to spend money except for a certain limit without actually having cash. Credit companies decide how a high limit of expenditure will expand to people based on their previous credit history. Individuals enter contracts for repayment of any money charged on their cards, either in the form of a flat -rate amount within one month or through smaller monthly payments.

There are generally costs associated with unsecured credit card. The debtor agrees to refund a predetermined interest rate except for the amount of money charged on the card. Interest rates differ and may increase dramatically if the bill is paid late or temporary extended period with low interest. However, interest does not accumulate if jE balance paid every month in full. Fees are also normally charged for crossing via credit limit or account payment late. Most fees and interest can be prevented by unsecured credit card wisely.

Unsecured credit cards are usually given to people with good or average credit rating. Individuals who have a poor debt repayment history tend to have trouble approval for one. This is because there is no security for creditors, if the debtor stops paying his credit card account. Lending unsecured money to someone with a low credit score would be a high risk of financial institution.

Instead, these individuals are usually offered secure credit cards that have more restrictions. Holders of secured credit cards must insert a certain amount of money to an account that is inspected by a credit company. This partTKA can be up to 150 percent of the credit limit. IS MONEY IS DRAWED FROM ACCOUNT TO COVER FEES If the individual does not pay his account. Secure credit cards are also more likely to have high annual fees and high interest rates. The advantage of having them is that they can help increase the low credit score if they are used responsibly.