Financial experts have estimated that as much as one-third of all the money in the world is in electronic form, i.e. these funds are circulated through credit card transactions, online payments, etc. So, it seems more than natural that more and more people nowadays have established some electronic portfolio. For instance, you may need a credit card to book a room in a hotel of your choice, to purchase airplane tickets from an online provider or to rent a car. When used in a wise and responsible manner, credit cards can be a great convenience, making it possible to purchase goods and services from your home. The text below deals with some of the most common questions regarding credit cards.
Secured credit cards, which are credit cards for bad credit, are restricted credit cards that only allow you spend the amount that you have deposited before hand. For example, if you put five hundred dollars in a bank account, the limit on your secured card will be this amount of money or slightly higher. Some banks may allow you to add more credit to your deposit while others may reward you for being a diligent customer. Then, they may even increase the limit on your secured credit card.
Although most of the large financial groups issue secured credit cards, prospective cardholders have to be careful and choose a card that has no application fee. When picking up a secured credit card, one should also bear in mind that the annual costs of different cards may vary to a considerable extent.
Nowadays, economists have noticed a tendency toward less banking activity via secured credit cards. The reason is that bank clients usually apply for unsecured cards with lower limits and higher interest rates. However, secured cards may be the only available option for people who are trying to regain financial stability after a major life event (such as divorce, a layoff or a serious illness). Also, some banking institutions offer only secured cards to clients who do not have a previous credit or loan history with the bank.
When filing an application for a secured card, a common trap to watch for is that some banks will issue the card only if you buy an insurance policy, coming with a bulky monthly installment. Also, some secured car. Cards may even have higher interest rates and annual fees than unsecured ones. So, before applying for credit card, ask yourself if you need it. Concerning the interest on your deposit, you will be receiving as much money as you would get if you just opened a savings account at your bank.
Finally, if you have enough financial discipline to use a car. The card in a responsible manner, you will be just as good with an unsecured one. Financial advisors recommend secured credit cards only as a stepping stone towards the establishing of a good credit rating.