Unsecured Credit Cards
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Bad Credit Doesn't Rule Out Unsecured Credit Cards
Many people believe that because of their bad credit, unsecured credit cards are not available to them. While it may be more difficult, there are options for people with bad credit who want an unsecured credit card to build their credit or have available for use in an emergency. While a secured credit card is the most commonly recommended option for people with bad credit, unsecured credit cards ARE available - even for those with the worst credit.
Bad Credit: Unsecured Credit Cards vs. Secured Credit Cards
One of the easiest ways to get a credit card when you have bad credit is to opt for a secured credit card. With a secured credit card, you deposit money in a bank designated by the credit card company to serve as a 'security deposit' - an assurance that they'll get their money if you default on payments. Depending on the lender, that deposit might be equal to your desired credit limit, or slightly higher or lower. A security deposit of 0, for instance, might get you a 0 line of credit with one company, a 0 line of credit with another, and a 0 one with yet a third. The interest rate is generally competitive, since the company has a guarantee of getting its money if you don't make payments.
Unsecured Credit Cards
An unsecured credit card requires no security deposit. A bad credit unsecured credit card will often have either a high APR (annual percentage rate), high fees, or both. How do the two stack up against each other? Here's a comparison from two actual credit card offers that are sitting on my desk as I write:
Secured Credit Card
Security Deposit: 0
Annual Fee:
Setup Fee:
APR: 15.40%
Credit Limit Increases: 0 increments, each require 0 deposit
Unsecured Credit Cards
Bottom Line: It will cost you 0 to maintain a 0 credit limit for the first year, with at least 0 up front, at an APR of 15.40%. You'll have 0 available credit upon receipt of your card. You'll have to put up an additional 0 every time you want to increase your credit limit.
Bad Credit Unsecured Credit Card
Annual Fee:
Setup Fee:
Participation Fee: (annual, billed at monthly)
Program Fee: (one time fee)
APR: 9.9%
Credit Limit Increases: (per increase of 0, at their discretion)
Bottom line: It will cost you 4 for the first year, all of it billed to your credit card on your first statement, to maintain a 0 credit limit with an APR of 9.9%. You'll have credit available upon receipt of your card.
In the long run, while a bad credit unsecured credit card may cost you more, you won't be tying up your money up front. Either card will help repair your credit as you make payments on time and regularly, but the unsecured card has an APR that's almost 5% lower. You're the only one who can decide which is the better option for you - but it makes sense to weigh all your options before you decide that your only way to have a credit card is with a security deposit.
@ Copyright 2005 - Bill A Smith
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Unsecured Credit Cards and Loans, how safe are they?
I’m in a really tight financial bind, and I was reading on the web today about “unsecured credit cards and personal loans”. I was wondering how safe they are, and if anyone has tried them what to expect…
If you are filing for bankruptcy will they take away your assets for unsecured credit cards?
when you file for bankruptcy will they take your assets in payment for your unsecured credit cards?
They would have to see what assets you had yes. You want to be very careful doing that, it will really screw up your credit, and a lot of companies won’t touch you after wards.
P.S as the person above me states, they won’t for the unsecured cards, i meant in general
This is what we think as a traditional credit card. There is a set amount of money that you are allowed to buy stuff with and you receive a bill to pay it back.
A secured credit card, you prepay how much you want to spend. There isn’t a bill.
Do I stay current on my home mortgage or unsecured credit cards?
I recently got laid off from a second job. I used this to keep current on my unsecured debt(Over 50k) we had a rough couple of years with medical and household expenditures. Between my wife and I through our primary jobs we can keep current on our home loan and keep the household budget going along. I just won’t be able to make all the current payments on my debt. I guess my question is since the cards are unsecured should I concentrate on keeping my home loan current at the expense of my FICO scores?
No brainer. Keep paying on the secured debt and forget the rest…for now. Secured debt would include anything that the creditors can come and take back if you stop paying; your HOME, your CAR(s).
Now might be a good time to speak with an attorney for a free consultation. I got in the same situation and fought with it for several years before I finally had to file a chapter 13 bankruptcy.
Since then, we have had a much easier time getting by, and our credit was shot by then anyhow since I also couldn’t pay the credit cards regularly.
I’m not saying that’s the only way out, but the first consultation is free (you just have to swallow your pride) and they will let you know if you qualify for bankruptcy or if you would be better off trying some debt consolidation, etc.
Call and make an appointment and ask them what you need to bring with you. At least after the appointment, you’ll be able to put everything in perspective.
Is there a difference between secured and unsecured credit cards ON YOUR CREDIT REPORT?
I know the difference between the two cards, but I want to know if there is a difference between the two on your credit report. For example, would it be more beneficial to have an unsecured card for your credit score? Or does it not make a difference which card you have?