What is secured and unsecured credit cards?

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What is Secured and Unsecured Credit Cards?

• PowerPoint Presentation on What is Secured and
  Unsecured Credit Cards?

2
What is a
Secured Credit Card?

• Its a type of credit card provided against an
  asset, which could be fixed deposit or any other
  savings. In a nutshell, a secured credit card is
  backed by some collateral that needs to be
  submitted to the respective bank or financial
  institution before availing.
• Such credit cards are most suitable for people
  without a good credit score. These credit cards
  help an individual in building a good credit
  score and helps them to get easy approvals on a
  regular credit card. In case of a default, the
  bank can liquidate the fixed deposit accounts or
  the asset submitted to recover the lost amount.
• If the person has a good repayment history, then
  the bank often increases the credit limit of that
  person, and this increased credit limit also adds
  up to the credit score.
• A cardholder cannot close the fixed deposit
  account until the secured card is in her/his
  possession. In case of non-payment, the asset is
  forfeited to the bank. The borrowers with bad
  credit history and scores are generally asked to
  pay-off collateral, as they are seen as risky
  investments.

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How do Secured Credit Cards work?

• The working principle of these cards is rather
  elementary. When applying for the credit card,
  the bank will take your fixed deposit accounts as
  collateral to make sure you dont miss out on any
  payment.
• In case you default on your payments, the
  lenders will draw the amount from your fixed
  deposits. This also reduces the risk of falling
  into the debt with a credit card. If you keep up
  with your timely payments, then your credit score
  will have some positive remarks on its side.

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What is a Unsecured Credit Cards?

• Most credit cards offered by the lenders or
  financial institutions are unsecured. Simply put,
  it is a card which can be availed without any
  collateral. Instead of asking for the collateral
  up-front, banks charge an interest rate on the
  purchases made by the customers through the card.
• You dont need to have a fixed deposit account
  with the bank or give any collateral. Customers
  qualify for an unsecured credit card based on
  their credit history, financial strength, and
  earnings potential. An unsecured credit card
  offers lower-interest rates, extra benefits and
  better rewards than a secured credit card.

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How do Unsecured Credit Cards work?

• No collateral is required to avail an unsecured
  credit card. The terms of debt are based on
  factors like borrowers credit score, ability to
  pay back in full and other factors. Since the
  debt is unsecured, such type of cards are
  slightly riskier on part of the lenders. In case
  of default or non-payment, the charges keep on
  compounding.
• An unsecured card comes with hoards of benefits
  and reward points. Lenders or any other financial
  institution often provides lower fees, higher
  credit limit, since, they seem to be more
  reliable.

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a Credit Card Via IndiaLends.

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• To Know more about Credit Cards, Personal Loans -
  Browse our blog - https//blog.indialends.com/
  to stay updated.