Credit cards are usually easy to obtain and use. They are issued, usually on time, by banks and lending institutions as a part of debt management programs for consumers. These types of credit cards are good in that they offer consumers a way to manage their debt without having to go through a debt consolidation process. Credit cards also provide consumers an opportunity to build a credit history and a history of making payments on time so that they can have more options in the future if they choose to apply for a home mortgage or to purchase a car with a loan.
Credit cards are divided into secured and unsecured. A secured card is one that requires collateral such as a savings account or a loan to be qualified for the credit card. Unsecured credit cards are ones that do not require collateral. In this way, credit cards provide consumers with a way to apply for credit without the risk of losing their collateral.
Many of the secured credit cards work very much like a typical checkbook. The consumer accesses their secured credit cards through the bank account and makes purchases placing the designated amount in the designated account. The benefit to the consumer is that the amount is deducted when the purchase is made, but the credit limit is still intact. This allows consumers to build a history of regular payment, which has a positive impact on their credit score.
The terms and benefits of unsecured credit cards are not as wide-ranging, although they too have been designed to attract and accommodate cardholders. Some of the pros of using these types of credit cards include allowing cardholders to make purchases over the phone or at kiosks at various retailers without being required to leave their personal banking accounts to make these purchases. Some of the benefits to secured credit cards include allowing cardholders to make purchases at ATMs around the world and to make purchases at gas stations worldwide.
Unsecured credit cards that do not require a checking account to be opened also offer many of the same perks as debit cards. The benefits of unsecured cards include allowing cardholders to make purchases at a variety of retailers around the globe without the need to provide a checking account. Cardholders may also choose to make purchases with debit cards through the ATM machine at their leisure.
Some consumers prefer the convenience of debit cards because they allow cardholders to withdraw money directly from their bank account at any time. This allows cardholders to have money on hand for emergencies that occur without worrying about how to get the money to the party that they would like to send it to. Unsecured credit cards offer no debit cards. This means that cardholders cannot spend money directly from their bank account to make purchases.
Consumers who use prepaid debit cards will need to set up an account at a financial institution in order to be able to withdraw money from their accounts when an emergency occurs. Prepaid debit cards will still allow cardholders to make purchases, but cardholders will not be able to withdraw that money until their next billing cycle begins. Once a month, cardholders will be able to withdraw the prepaid amount equivalent to the amount of money they spent during the previous month. Cardholders will also be able to add money to their prepaid debit card account as long as they maintain a balance over time. If an emergency should arise and cardholders do not have access to their bank account, they will still be able to make purchases by using their debit card.
Prepaid debit cards are much like unsecured credit cards, except they have no need to be insured. They are also great for consumers who live in countries where banks do not operate or have little business. These types of cards are very popular in Europe, Canada and Japan. They are also growing in popularity in the United States. In America debit cards are becoming increasingly common, as Americans become used to the ease in which they can quickly and easily manage their finances.