When most people think of credit cards, they are thinking of an unsecured credit card. An unsecured credit card is a card that is issued to you based solely on your consumer credit score and repayment ability. A secured credit card requires that you deposit funds into an account held by the credit card’s issuing bank as a guarantee of payment. Your credit limit is generally a percentage of your account balance. Most credit card offers are for unsecured credit cards, but there are many companies that deal almost exclusively with consumers that are looking for a bad credit credit card or a no credit credit card. For many of these consumers, because it may be difficult to obtain an unsecured credit card for bad credit, a secured credit card may be the only way they can rebuild a satisfactory credit score after a period of financial hardship. Be wary of secured credit card offers. Many of them seem appealing, especially when you see an ad online that offers and online credit card application and instant online credit card approval.

This type of credit card application tends to appeal to our need for instant gratification but neglects to address the reality of owning the card. Many secured credit cards have fees that are significantly higher than unsecured credit cards. These fees may include an application fee, a yearly membership fee, and some sort of maintenance fee. Additionally, any penalties that are permissible may be quite a bit higher than those for an unsecured credit card. Whenever possible, opt for the unsecured credit card so that you are more likely to get lower rates and fees and so that you will not have to tie up funds in an account sponsored by the credit card issuer. If this is not an option, be sure to find the card with the lowest credit card interest rate, few or no fees, and interest bearing security account options.