An unsecured credit card is by definition a credit card which is issued without a security deposit. To be eligible for an unsecured credit card in the US, the applicant should have a high credit score and a credit history which demonstrates reliability and responsibility in paying his or her bills and debts on time.
Who Should Consider an Unsecured Credit Card?
Unsecured credit cards are only issued to consumers who have a ‘good credit rating’. You must have a positive credit score which can be gained by paying your bills on time. Financial institutions will determine your credit score by reviewing your missed and late payments, debt to income ratio- on all credit cards.
If you have a good credit rating, banks or financial institutions authority can issue an unsecured credit card for you. Besides, if you do not have a good credit history but are able to show your evidence for paying your debt timely, unsecured credit card can also be issued for you.
What are the Benefits of Unsecured Credit Card?
An unsecured credit card is generally considered the best credit card to have because it has lower annual fees and interest rates and offers more convenience and rewards than a secured credit card.
The more higher your credit score the fewer fees and interest you will have to pay via your credit card. You would also be ensured a higher credit limit in the future when you have a better credit score.
- Unsecured credit cards are characterized by their low interest rate and miscellaneous fee.
- Basically there is no need for you to pay any upfront fee. All that is required is a membership fee annually and you would be given your unsecured credit card.
- When you make a purchase or withdraw cash (usually called a cash advance), funds are drawn from your “line of credit.”
Don’t forget! You will be responsible for paying the credit card bill every month.In addition, you will pay fees and interest if the balance isn’t paid in full each month.