How to Distinguish a Secured from an Unsecured Credit Card

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How to Distinguish a Secured from an Unsecured
Credit Card

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• In this presentation, well talk about the
  factors that will help differentiate a secured
  credit card from an unsecured card program. Here
  are 4 distinguishing factors.

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The security deposit requirement.

• As their names imply, secured lines of credit
  always come with a security or collateral
  requirement. In the case of secured credit cards,
  such requirement comes in the form of an initial
  deposit. But what is it for? The deposit actually
  serves two important purposes. First, it serves
  as a guarantee for repayment. In case you fail to
  keep up with your credit card bills, your card
  issuer can easily tap on the deposit you have
  provided to settle your unpaid charges. Second,
  it serves as the basis for the spending limit
  that will be imposed on your card program. In
  most cases, the amount of your security deposit
  will determine how much bills or purchases you
  can charge on your line of credit. For instance,
  if you submitted 500 to your card issuer then,
  you can enjoy a credit limit of up to 500.

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• On the other hand, unsecured credit cards, in
  general, dont have initial deposit requirements.
  You can be granted the card you need, even if you
  dont offer collateral to your card issuer. As
  long as you meet the eligibility requirements on
  the credit card you wish to take out then, you
  can look forward to receiving the line of credit
  that you have applied for.

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The credit score requirement.

• Issuers of secured credit cards rarely run credit
  checks on their card applicants. In fact,
  consumers can look forward to being granted the
  secured lines of credit they need, regardless of
  their credit standing.
• Unlike secured card programs, however, unsecured
  credit cards are only offered to consumers with
  excellent credit standing. Most companies that
  provide this type of credit card not only have
  strict qualifications, but they also impose
  stringent credit score requirements on the
  programs they offer to prospective cardholders.

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How soon you can receive the line of credit you
applied for.

• Since issuers of secured card programs rarely run
  credit checks they can provide instant approval
  to their card applicants. This means that if you
  can file your application and submit the security
  deposit as well as the required financial and
  personal documents, early you can look forward
  to receiving the credit card you need in the
  earliest time possible.
• On the other hand, applications for unsecured
  credit cards might take a while to get approved.
  This is because card issuers need to take enough
  time to consider not just the credit standing but
  also the financial capability of their card
  applicants.