Whenever you consider a credit card, the probabilities are you see a thing through which you can borrow money to pay for merchandise or facilities, and either settle the bill on a month-to-month basis by paying your bill off in full, or only pay off a part of what you've borrowed and be charged interest on the rest. This is in truth how the vast majority of cards work, and they're so easy to use in today's online arena that the majority of individuals now possess a minimum of one credit card.
This is all good for people having a decent credit ratings background, who get the chance to pick and choose from cards giving rewards like interest free balance transfer deals, money back, reward schemes and so forth. Even individuals with inferior credit scores could possibly get hold of one of several special sub-prime credit card accounts which are available, however these cards tend to have very high aprs, small credit limits, and not much in the way of extra features and rewards.
But what of individuals with tremendously weak credit ratings, who cannot get approval for a card account? This is where secured credit cards come in. These bank cards are not really 'credit' cards at all, for the reason that you can't borrow anything making use of them. Before you make use of them, you will need to deposit cash in your account, that you can then spend at any place which accepts standard cards. Furthermore in contrast to normal cards, you don't get charged interest charges on what spent, but instead pay either a fee to lodge funds, or are charged a smallish portion of anything you spend.
These cards are a very good thing for both the customer plus the issuing financial institution. The account holder gets to enjoy the convenience of using plastic in their daily world, and at the same time the banks get to make a profit with no any of the dangers involved in lending money to folks with unfavorable credit ratings.
But is it just those with impaired credit who are going to use guaranteed cards? Not at all. Lots of people are petrified of running up large debts using a credit card, which it is all too easy to do, and prepaid cards don't hold this possibility, letting the bearer to use plastic without worrying about debts.
These cards may also be suitable for folks under the age of 18, who aren't legally permitted to receive credit. There is also the advantage that it is safer for youngsters to keep a plastic card than cash, which might be easily misplaced or, worse, stolen.
Author Resource:
Michael writes on credit and related topics, and you can read more about secured credit cards at his site.
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