Secured and Unsecured Credit Cards

What is the difference between secured and unsecured credit cards? Not much in the sense that when you are using a secured or unsecured credit card the principals are the same, they look the same and both offer the same type of convenience. The only difference is when obtaining a secured credit card you have to put up some kind of collateral, for example, your home, car or cash.

Secured Credit Cards

The typical reasons for obtaining secured credit cards are if you have had bad credit in the past or if you have no credit history at all. A secured credit card is ideal if you want to rebuild a good credit history after having a bad credit history. With a secured credit card, unlike an unsecured credit card, the interest will inevitably be higher because you may be seen as a high risk customer. It is essential to keep up with your secured credit card repayments as you are at risk of losing your collateral put up against your credit card if you fall behind, also, if you have had a damaged credit history in the past it is essential to repair your credit history if you want to borrow in the future.

Unsecured credit cards

Unsecured credit cards are ten a penny now and almost everyone has one. The unsecured credit card is your typically normal credit card. There are many types of unsecured credit card, from a cash back/reward credit card to Football credit cards if you are an avid footie supporter, charity credit cards and 0% credit cards. The list is endless; you can even customize your credit card with photos. Depending on your credit history, you can be offered some great low interest deals. Unsecured credit cards often come with introductory incentives of 0% deals and 0% balance transfers.

Whether your credit card be secured or unsecured being sensible with your spending on them is vital for you to have a good credit history. Your credit history is a key tool for credit card companies to use when assessing your credit card application. The better your credit history is the better the deal you will get when applying for one.

You can acquire your credit history from a credit reference agency. Experian and Equifax are the two most well known credit reference agencies in the UK. For only 2 pounds you can receive a credit report that lists your credit history. If you have been refused credit or are thinking about applying for a secured or unsecured credit card it may be a good idea to send for your credit history and know your financial history before applying.