Be on the lookout for unsecure credit cards.
Everyone and their grandma is coming up with their own payment methods these days. Amazon has a credit card, PayPal has a credit card, Apple has a credit card, heck, even Starbucks has a credit card. Some of these esoteric cards can be useful if you patronize their associated businesses frequently enough to reap their rewards. However, not all cards have your benefit in mind. There are credit cards out there, commonly referred to as unsecure cards, that for one reason or another, could end up costing you far more than they save you. Before you sign up for a new card, make sure to screen it carefully for warning signs.
If you pay off your full balance every month, then you don’t have to worry about things like interest rates. Of course, everyone has their own financial situations, so sometimes a little interest is unavoidable. Properly secured cards will usually charge reasonable rates, provided you have decent credit. Certain cards aimed at those with less than stellar credit, however, can charge interest rates of up to three times the other guys. This is deliberate- if you’ve got a history of carried-over balances, they want to take advantage of that to bleed you dry.
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Speaking of bad credit, any credit card worth its magnetic strip reports all expenditures to the three major credit bureaus: Equifax, Experian and TransUnion. This is a good thing because not only does it give you the most complete report of your credit possible, it covers all your bases in case you need to get a loan. Unsecured cards may not report your expenditures to all three bureaus, so even if you keep your card square, if you need to get a loan from someone that pulls from a bureau your card didn’t report to, you’re up the creek.
These are just a couple of examples of warning signs of unsecured cards. Remember, credit cards are not bottomless wellsprings of money. Think of them as middlemen between you and your purchases. If you’re gonna work with a middleman, you want him to be well-dressed and trustworthy, not smelly and shifty-eyed.
