To understand why unsecured credit cards are better, we must first define it.
The general definition of these cards states that these are credit cards that provide you with a line of credit that do not need any proof of ability to pay such as bank deposits.
In other words, the lenders are basing their approval on the credibility of the applicant’s character to pay back whatever he will borrow.
However, there are some changes in the trend today because even if you have no previous credit or you had a bad credit in the past, you can still apply for this type of card and have the chance of being approved.
On the other hand, to define unsecured cards clearer is to give the definition for secured credit cards, which is the opposite.
As the name connotes, secured cards need to be back-up with a bank account.
The amount of borrowed amount should not exceed the amount of the deposit.
These are best for people who are building their credit history for whatever reason they may have.
Now, to know why it is better; we will discuss some of its features that are beneficial.
- Waived Annual Fee
Most issuers of unsecured credit cards waive the annual fee for the first year when an applicant signup for a card.
The usual amount of annual fee is about $150 dollars per year or more to some issuers depending on the type of card.
But, when you check on these cards to choose the best brand, make sure that there are not other fees that will be charged to your account.
For example, there are some cards that have monthly maintenance fee.
One best way to make your card free from other charges is to always pay the total amount monthly.
- Lower Interest Rates
Unsecured cards normally have lower interest rates than secured cards and other types of cards.
Therefore, make sure that the card you are getting has the lowest interest rate possible.
Sometimes there are some cards that offer zero interest.
This may seem advantageous, but you have to be very careful for hidden costs.
Read the fine print and all pertinent information about the offer and features.
- Cash Back
Cash back offer is beneficial, but often misleading.
This offer is commonly featured on unsecured cards.
The usual cards may take years before you are able to earn the points and redeem them.
So, you should check the details of the offer before you choose which card has the most advantageous ruling and cash back program.
The Best Unsecured Credit Cards
The best that you can have is the one that gives you lower interest rate without any other hidden cost, waived annual fee, and with fast cycle for the cash rewards and airline mileage rewards.
It will also help a lot if you can find an unsecured credit card that offers a balance transfer option.
When applying, do not be ashamed to negotiate for a better interest rate, which you are mostly like getting.
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