Intro to Unsecured Credit Card Use 101

A Credit Article Contributed by Ann Hull

What's an Unsecured Credit Card?

You really need an unsecured credit card about now. . . .maybe you're bouncing back from a bankruptcy, or some other problem, and more likely, you've little or no credit. You might be a student, with minimal income and resources. In, any case, you could really use a credit card, preferably unsecured, because you're broke, or just about it! And you might be having some trouble getting an unsecured card. But, you know that all you really need is a little credit, a card with a low limit, and naturally, you'll have to have a plan to pay the thing back!

Now, you realize that if your credit really stinks, like you missed a car payment or something, or charged up some other card, well, you may be asked to secure your credit card account with a deposit, and there may be no way around this. It happens. But if you don't have any substantial history, you might just be eligible, somewhere, for an unsecured card. . . .

Secured Credit Cards and Unsecured Credit Cards: the Main Difference

Here's the deal, your debts are either secured or unsecured. Secured debts are normally backed by an asset, such as your car for an automobile loan, or your home for a mortgage. So, if you don't make your payments, the creditor can foreclose on your residence or can repossess your vehicle. Unsecured debts are not associated with any asset. Medical bills, signature loans, other debts, and most credit cards are considered to be unsecured.

So, why might an unsecured card be right for you? Well, you gotta feed that secured card, some cash, before you eat off it, right? Or before you purchase anything else with it. So, if that's what you're getting, when you're able, do remember, it's a good way to build your credit. But, if you can get an unsecured card, you won't have to fund it, which might be of help to you, in dire financial straits. Of course, frequently, these cards don't have very high credit lines, maybe as low as $250-$500, which is just fine for someone starting out, or rebuilding damaged credit.

What are the Benefits of an Unsecured Credit Card If the Available Credit on It is Rock Bottom?

Again, you're building or rebuilding your credit, so ensure you pay off your entire balance every month, at least for a while. Or make yourself a good, substantial payment, more than the minimum requested. Don't forget to figure accurately what you can afford to pay off, and so, how high you can charge. You certainly don't want to dig yourself a deep, dark hole or credit card debt! ! !

So, using your new unsecured card, you can charge a little, pay off your bill, and get a good credit history-an excellent reason for getting an unsecured card, if you can. And, make sure not to incur any more credit card bills, 'til you know you can pay them off. Use your credit card for what you need, and pay it off with your part-time job or student loan

Beware the ring, Master. . . Beware Potential Problems of Unsecured Credit!

Remember that credit newbies can easily get into debt trouble, and that students, people who've not used credit before, or those who've had past emotional financial problems-are all known for getting in trouble with unsecured credit cards. So, have the wisdom of the Wizard. Consider your unsecured credit card as a resource for credit building, not as a license to spend, like a wealthy celebrity. You'll be sorrrrrry, if you do! ! ! So, be smart and enjoy that unsecured card, but always use it, using your smarts. . . . .