There are two main types of credit cards: those with a deposit and those without. This article talks about some of the problems that come with credit cards that don't have to be paid back.
First of all, what is an unsecured credit card? A credit card (and credit line) that doesn't need a security deposit from you is called "unsecured." Most of the time, these unsecured credit cards are for people with a good credit history.
Almost all unsecured credit cards will have a limit on how much money you can borrow. This is the maximum amount of money you can put on the card. If you go over that limit, you might have to pay a fine. The credit limit is set by the company that gave you the card, and it doesn't have to be the same for everyone. In other words, one person's limit might be $500 and another's might be $5,000.
A person who wants to get an unsecured credit card should know about a few important things. Some of these problems are:
The Grace Period: For each of your credit cards, you should read and understand the grace period. The grace period is the amount of time you have to pay off your balance before the credit card company starts charging you interest. If you pay off your whole balance before the grace period is over, you won't have to pay interest. Each company has its own policy about how long you have to make a payment after the due date.
Annual Fee: Check to see if a company charges an annual fee before you apply for an unsecured credit card. This is an annual fee that may be taken out of your account or paid in advance. Most of the time, annual fees come with secured credit cards, but they can also come with unsecured cards.
Balance Transfer: A balance transfer is something that your unsecured credit card may let you do. When you have a balance with another company and move it to the new card, this is called a "balance transfer."
What would make you do that? If the interest rate on the new card is much lower than the rate on the old card, you can save money.
Annual Percentage Rate (APR): The APR is something that people who want to get or use an unsecured credit card should pay attention to. This is how much interest the company will charge you if you don't pay off the entire balance by the end of the grace period. As you might expect, the less the APR is, the less interest you will have to pay.
Finance Charge: Your unsecured credit card may include finance charges that are above and beyond the APR. Most of the time, you have to pay finance charges when you get a cash advance. Again, make sure you know what these fees are before you use your card for things that will cost you more in finance fees.
Gold or Platinum Cards: These cards usually have a higher credit limit and may come with extra perks or reward programmes. These are nice to have, but make sure you don't pay extra for something you won't use.
