Unsecured Credit Cards
Most credit cards are unsecured. In fact, aside from the secured and prepaid credit cards, and debit cards, every credit card in the market is unsecured making them the easy to get credit cards in most peoples eyes. Unsecured credit cards are characterized by the following:
1. Every unsecured card features a credit line, which is the credit limit that is allowed to the user.
2. All unsecured cards are charged an APR (Annual Percentage Rate), which represents interest charged on money used.
3. Users are allowed a grace period, which is the time that they have to use the credit. The card issuer starts charging the APR (and other charges like late fees, if applicable) on the sum that remains unpaid beyond the grace period.
4. The card issuer sends monthly bills, which also inform the user of the total and minimum amount due. The minimum amount due is a percentage of the current balance.
5. When users pay late or cross their credit line, the card issuer levies a penalty fee.
Advantages of unsecured credit cards
Such cards are priceless and helpful financial tools, but the user must use them responsibly. All users must make it a habit to stay within their credit limit, pay on time and pay in full. The APR on unsecured credit cards is high and if users do not pay up the full amount by its due date, the interest can start adding up. Users who are responsible can be rewarded with discounts, higher credit lines, lower APR and more.
Types of unsecured credit cards
Rewards credit cards allow users to accumulate points for every dollar spent and then redeem the points for valuable goods and services. For example, points accumulated can be exchanged against air tickets, gifts, restaurant/hotel stay discounts, and other items. Reward points come with an expiry date and all users must redeem their rewards in time.
Balance transfer unsecured credit cards allow people who are buried under credit card debt to transfer their balance to a card that charges them a 0% APR for a fixed period of time (usually 12-18 months). Users can take advantage of the zero interest and shrug off their debt.
Low interest unsecured credit cards work well for users who want to carry forward a balance every month.
Cash back unsecured credit cards work just like rewards cards. Users pile on their reward points and then redeem the points for cash or discounts. However, all cash back cards require the user to spend a certain amount to qualify for rewards.
Users who have an outstanding credit score, high incomes, and a great credit report are usually invited by banks to obtain top-tier or elite unsecured credit cards. Such cards carry membership fees and offer significant advantages like invitations to high-profile events or exclusive restaurants. These cards are intended for wealthy folks. These credit cards are also great to use as business credit cards due to low risk of asset sezure if you cant make the minimumpayment in difficult times.
Users must choose unsecured credit cards based on how it can make their life easier. They can obtain such cards without giving any security. The card issuer checks the applicant’s credit score and history before issuing the card. Check your credit score here for free. Used right, unsecured credit cards can really make life easier for people and build up their credit score as well. Although you are not guaranteed credit card approval, a unsecured credit card is the card of choice for most people. Student credit cards, unsecured credit cards for bad credit and 0%credit cards are just a few of the options avaliable in this category. Check out our free comparisson tools!