A Closer Look at all the Types of Credit Cards & How They Work
Credit cards are a significant part of how we purchase goods and services in the United States. They provide an easy way to pay for items without having cash on hand, which is especially useful when traveling or shopping online where you might not have access to your bank account or wish to carry cash.
Each of these card categories has distinct traits and, depending on your financial situation, some of these credit card types will be more advantageous for you than others.
What Types of Credit Cards and Payment Cards are Available?
A secured credit card is a type of credit card that requires you to put down an upfront cash deposit, usually equaling the amount of your credit limit.
Secured Credit Cards
Secured credit cards work by having the cardholder front a required deposit to open an account, reducing the risk to the credit card issuer of you defaulting or missing a payment.
How Does a Secured Credit Card Work?
“Unsecured” means that your debt incurred on the unsecured card doesn’t come backed by collateral—a deposit in the case of secured cards—and relies on a borrower’s credit score.
Unsecured Credit Cards
They work by providing you with a revolving line of credit, meaning you can spend up to an approved amount without making a payment within a monthly billing cycle.
How do Unsecured Credit Cards Work?
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