Learn: What Types of Credit are there?

Learn: What Types of Credit are there?

What types of credit can I get? What types of credit cards?

There are two major types of credit: secured and unsecured.

Unsecured credit, which is what most credit cards are, is based on your promise and signature to repay the credit you have spent. These cards allow you the most freedom, and are given to those with perfect, good, and sometimes fair credit.

Secured credit is like a savings account that extends your money, and is typically used by those who have bad or fair credit who are not eligible for the cards with good features. For example, if you deposit $500 in an account with a secured credit card company, you could get a $1000 credit line. If you spend money with your secured card but donŐt make your minimum payments, the bank or credit card company may take your $500 for themselves.

Also in this category are debit and prepaid cards that are secured by your money. These cards can be obtained by those with anywhere from bad to perfect credit, because the money that is spent is not actually credit but a deposit that you make. Debit cards take money right out of your checking or savings account, and prepaid cards have a set spending limit based on how much money you add to them from your checking or savings account.

Within the secured and unsecured types of credit are many different categories of credit cards.