While a secured credit card is the usually suggested as the better option for people with bad credit, unsecured credit cards are available - even for those with the worst credit.

If managed appropriately , using an unsecured credit card can still help you recover your credit rating and improve your credit history. So what makes the secured credit card differ from the unsecured credit card ?

non-payment . Should this happens the bank can use this deposit as a form of payment . As a result of this guarantee, the interest rate on secured credit cards tend to be quite competitive. The level of credit limit allowed varies from lender to lender and will generally be in the line of how much deposit you paid. For instance, with a $500.00 deposit, one credit card company may offer you a secured credit card of about $300, and another may offer you $400.00 credit limit. It all depends on the lender you choose. A little research into this before you apply may prove worthwhile .
Unsecured credit cards on the other hand, do not require an such collateral . You simply apply and if your credit score is high , you can even secure it with very low APR rates . Here's the small print, if you have bad credit, you can still have one but the interest rate will be high .

So how do the you compare methods of securing credit? How do you know which one will suit your situation ?

To look at a real life example of how much a secured credit card cost. As a demonstration , if you want a credit limit of say $1,000 you will have to put up a collateral of $1,675 and each time you request for an increase of credit limit you will have to pay between $100 - $150 depending on the credit card company. The APR on this will usually be from 14.9% to 16.9 %.

For a bad credit unsecured credit card with a $250.00 credit limit , you will pay an annual fee of $48, then a setup fee of $29, a participation fee of $72 - this is billed annually and is spread over 12 months as a $6 monthly. You will also have to pay a program fee of $95. This is a one time fee with an APR of 9.9% . In addition, for each credit limit increase you request for, you will pay $25 per increase of $100. Obviously this last rate depends on teh credit card provider. Thus with these calculations, it will cost you $244 for the first year, all of it billed to your credit card on your first statement. You will have $72 credit available upon receipt of your card. Obviously the higher the credit limit you apply for the more chargers there will be.

To conclude, although a bad credit unsecured credit card may cost you more, you will not have to find money for the deposit. Either of these cards, will help you on repair your credit as long as you make payments on time and regularly , but the unsecured card has an APR that's almost 5% lower. It is important to weigh the options and see which on suits your situation.

In the end, it is better not to get into bad credit at all, as it seems the system is such that such that you will always pay more than people with better credit score.

By Jake Jenkins Is a Credit Repair Consultant. You can visit http://www.cheap-credit-cards.org for more information.

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