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| Home | Debt Consolidation | Credit 101 | Money Lessons | Bankruptcy | Financial Calculators |
What is a Credit Card? |
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Individual banks have their own policies, terms and conditions for their credit card applications. In general, there are two types of credit card which you can apply: a secured or unsecured credit card. The banks will approved their credit card applications based on their applicants’ repayment histories, also called as credit ratings. A secured credit card requires the applicant to deposit certain amount of cash, which equivalent to the credit limit desired. For example, if you deposit $2,000 USD, you can be approved up to $2000 spending limit. If you failed to make your credit card payment, the bank will deduct the amount from your deposit amount. An unsecured credit card, on the other hand, is generally issued to those who have a good credit records and constantly repay their monthly payment on time. The approved credit limits is determined based on individual basis and it may be increased or lowered based on the card holder payment performance. An unsecured credit card can be viewed as a type of personal pre-approved loan, but interest rate is higher comparatively. While credit card can be very useful, it can also be risky. Even people who are usually good with their money get into trouble with credit cards. The problem is that people use their credit cards too often and let their debt add up. Then they can only pay back small amounts at a time. This ends up costing a lot of money in finance charges. |
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