What is Secured and Unsecured Credit Cards

1. What is Secured and Unsecured Credit Cards? PowerPoint Presentation on What is Secured and Unsecured Credit Cards?

2. What is a Secured Credit Card? ● It’s a type of credit card provided against an asset, which could be fixed deposit or any other savings. In a nutshell, a secured credit card is backed by some collateral that needs to be submitted to the respective bank or financial institution before availing. ● Such credit cards are most suitable for people without a good credit score. These credit cards help an individual in building a good credit score and helps them to get easy approvals on a regular credit card. In case of a default, the bank can liquidate the fixed deposit accounts or the asset submitted to recover the lost amount. ● If the person has a good repayment history, then the bank often increases the credit limit of that person, and this increased credit limit also adds up to the credit score. ● A cardholder cannot close the fixed deposit account until the secured card is in her/his possession. In case of non-payment, the asset is forfeited to the bank. The borrowers with bad credit history and scores are generally asked to pay-off collateral, as they are seen as risky investments.

3. How do Secured Credit Cards work? ● The working principle of these cards is rather elementary. When applying for the credit card, the bank will take your fixed deposit accounts as collateral to make sure you don’t miss out on any payment. ● In case you default on your payments, the lenders will draw the amount from your fixed deposits. This also reduces the risk of falling into the debt with a credit card. If you keep up with your timely payments, then your credit score will have some positive remarks on its side.

4. What is a Unsecured Credit Cards? ● Most credit cards offered by the lenders or financial institutions are unsecured. Simply put, it is a card which can be availed without any collateral. Instead of asking for the collateral up-front, banks charge an interest rate on the purchases made by the customers through the card. ● You don’t need to have a fixed deposit account with the bank or give any collateral. Customers qualify for an unsecured credit card based on their credit history, financial strength, and earnings potential. An unsecured credit card offers lower-interest rates, extra benefits and better rewards than a secured credit card.

5. How do Unsecured Credit Cards work? ● No collateral is required to avail an unsecured credit card. The terms of debt are based on factor’s like borrower’s credit score, ability to pay back in full and other factors. Since the debt is unsecured, such type of cards are slightly riskier on part of the lenders. In case of default or non-payment, the charges keep on compounding. ● An unsecured card comes with hoards of benefits and reward points. Lenders or any other financial institution often provides lower fees, higher credit limit, since, they seem to be more reliable.

6. Check your Free Credit Report before applying for a Credit Card Via IndiaLends. ● Did you know that you can get your credit report for free online? All you have to do is fill in your basic details, and see your report. It is highly recommended that you see your credit report online at least once every three to four months to stay updated. ● For more information about Credit Report, please browse: www.indialends.com ● To Know more about Credit Cards, Personal Loans - Browse our blog - https://blog.indialends.com/ to stay updated.