In essence there are 3 types of credit cards or debit cards available. They are categorized as unsecured credit cards, secured credit cards, and prepaid cards. We’ll review the purpose of each to help you better understand which will fit your requirements best.
Unsecured credit cards are the characteristic cards that most consumers are used to. Unsecured credit cards include all those cards offering extraordinary incentives including low interest, introductory APRs (Annual Percentage Rates), balance transfer offers, and bonus points and cash. Most unsecured credit cards have low rates and little to no fees, plus they don’t require security deposits. Even though one can find cards available that are available to consumers with low credit, nearly all unsecured credit cards entail average to excellent credit. If you are not in any credit misfortune, apply for these first as they offer the very best benefits plus aid to grow your credit history.
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{Because of all the offered rewards and other great benefits, together with helping to build a solid credit history, nearly all consumers will want to stick with the unsecured credit cards. |Because they help develop a solid credit history and offer rewards and benefits, nearly all consumers should stick to unsecured credit cards if possible.
For Secured credit cards, rather than being based on your credit history, your credit limit is set by a security deposit you send in to your credit card company. For instance, a $500 security deposit would mean your credit limit is $500. The total you deposit is kept within a savings account and will not be used towards paying off your month to month balance. Once your account is closed, your deposit will be returned to you. If you either have yet to establish a good credit history or have gotten into misfortune with credit for whatever reason, Secured credit cards are marketed for you. The chief reason consumers choose a secured credit card is to build or re-establish their credit, as these credit cards report back to the credit bureaus.
Rather than carrying around cash, you can use prepaid cards to make purchases everywhere credit cards are accepted. Whatever amount you deposit will decide your available spending on the card. Prepaid cards are technically not credit cards since the issuer won’t report your account to the major credit bureaus, so they won’t have an affect on building your credit profile.
We’ll review the benefits of having your standard unsecured credit card, like the [name], now that you have an understanding of the various credit and debit card types available.
Compared to other types of payment, credit cards can offer huge advantages. In the United States, over 80 percent of households have at least one credit card. Cash back, frequent flier miles, and various other rewards programs are offered by many credit cards. Cardholders who use their credit cards wisely can experience major benefits; just be weary of the danger of overspending in addition to running up interest charges.
You can avoid running to the bank for cash, counting out change, or writing in a check book when you carry a major Visa, MasterCard, Discover Card, or American Express. Convenience is one of the most obvious strengths of credit cards. Credit cards even offer benefits over debit cards. While debit cards look like credit cards, they lack some of the benefits of being able to charge. When swiped as a credit card, your bank will oftentimes cover an amount charged in excess of your debit account balance, but this usually results in fees for insufficient funds. Debit cards are usually linked to your checking account and can sometimes have 24-hour charging limits.
Credit cards can have a positive effect on your credit score when used responsibly. Credit mortgage companies, credit card companies, retail stores, utility companies all review your credit score and history to see how prompt and responsible you are about paying back your debts. You will build a solid credit history that tells potential lenders they can trust you by using your credit card regularly and making your monthly payments on time.
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If you pay your bill in full each month, your credit card can help you budget expenses. If you do, your bill then acts as a master receipt that displays an itemized listing of what you spent your money on. You can get quarterly or annual summaries of your purchases in different categories from some credit card issuers as well. For those of you that have set up an online account with the credit card company (which I recommend), you can likely import the data into some form of personal finance tracking software.
The responsible way you handle your credit card is recorded in your credit history for lenders to review. The use of a credit card is directly connected to your credit score. Irresponsible use of a credit card will produce low credit scores which can result in either being denied for future credit or paying much higher interest rates. When you pay your bills on time and spend conservatively, your credit score will improve and demonstrate to lenders how creditworthy you are.
You can sometimes get the lender to ease the pain associated with things like the annual percentage rate and annual fees. Credit card companies are often open to negotiation, on anything from waiving the annual fee to lowering your APR to excusing a late payment. This is often news to many card owners, but you just need to ask.
It can cost a lender anywhere from $50 to $150 per account to attract a new customer. Due to the competition in the industry, it makes sense for your credit card company to do what it can to keep you from leaving them for a competitor.
Making a costly purchase with plastic gives you immediate purchase protection that you do not get when you pay with cash or some ATM cards. Certain credit cards will automatically extend your product warranty when used for those purchases. Your credit card issuer will most likely step in to help when merchants don’t deliver on things you pay for with the credit card. The money you are using to pay for a credit card purchase comes from the issuer, after all.
Most credit card companies will work very hard to resolve theft issues, as fraud is one of the industry’s biggest concerns. If your credit card happens to ever be stolen, you definitely must be sure to report such an incident. Managing your credit card account online is a great idea because it will help you detect fraudulent activity before a paper statement arrives in the mail. Making a purchase with your credit card gives you a degree of theft protection. Most credit cards offer a zero liability policy where you won’t be resonsible for unauthorized purchases on your card, given you report the theft immediately.
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