Your credit history is critical because it will describe your financial health. Building your credit can be hard work, especially if you have a lot of purchases. But ruining it will only take one missed or late payment. That’s why if you want to build your credit score effectively, you have to be smart when it comes to managing your finances. But, of course, nobody’s perfect. And there will be times where you will forget your payments or if you don’t have the money to pay for your bills yet.
If you unexpectedly have a lapse in your credit history, which negatively impacted your credit score, you will need to find a way to fix it. Fortunately, you can prequalify for a second chance credit card no security deposit at CreditBono. But what is the difference between secured versus unsecured credit cards? Let’s find out here.
Secured Credit Cards Require a Minimum Deposit
When you apply for a secured credit card due to poor credit, you will be required to deposit a fee, which will be used as your credit limit as well. For example, you opened a secured credit card, and you deposited a $300 amount. Therefore, your credit limit will also be $300, and you should pay this amount every deadline. Unlike unsecured credit cards, you don’t have to worry about depositing a minimum fee to open them. But for those with bad credit, you will need to start with a secured credit card, build good credit, and then transition to an unsecured credit card.
Low vs. High Interest Rates
Another difference between secured and unsecured credit cards is the interest rates. With a secured credit card, you will receive a higher interest rate compared to unsecured credit cards. So if you have a good credit score, you may apply for an unsecured credit card to avoid paying higher interest rates. But if you have bad credit, your application won’t be approved quickly. So it’s much better to apply for a secured credit card initially and then start paying your bills on time so you can qualify for the unsecured credit card.
To Qualify for an Unsecured Credit Card, You Will Need a Good Credit Score
The most significant difference between the two is that you will need a good credit score to apply for an unsecured credit card. That’s because the credit card company or bank will base on your FICO score and credit history. So if you have a bad credit score, you will be denied right away. But if you apply for a secured credit card, the chances of getting approved are high as long as you deposit a particular amount, which takes off the risk from you.