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Nowadays Secured Credit Cards are becoming popular among customers, as they not only let you earn reward points on your transactions but also help in building your credit score. On another hand, an unsecured credit card extends you a line of credit that you can draw on and then pay off, or make payments on, each month. Secured cards are similar in many ways to regular, unsecured credit cards.
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Secured Credit Cards:
As mentioned earlier, a secured credit card is designed to cater to the group of people who frequently faces rejection whenever they apply for a credit card. The reason could be lack of income or income proof, poor or no credit history/score, or any other. A secured credit card, as the name implies, is a credit card issued on some collateral.
Unsecured Credit Cards
Most credit cards on the market are unsecured credit cards. When you apply for an unsecured credit card, the credit card issuer will use your personal information, such as annual income, along with your credit score to determine your eligibility. Because unsecured credit cards aren’t backed by any kind of deposit like a secured card is, your card issuer won’t have access to funds to handle any unpaid debt you have on your account.