When it comes to credit, it’s a catch 22 – having a credit card is the fastest way to build credit, but you have to have good credit to get one.
The good news is if you have no credit, and in some cases bad credit, you can still get a credit card. These are called secured credit cards. In most cases, they will require a cash deposit for you to begin using them.
Once you have established a track record of repaying what you charge on-time, you can eventually qualify for an unsecured credit card. These are also referred to as no deposit credit cards.
Many people prefer this option because they don’t have to wrap up any of their money with the card. If this sounds appealing to you, learning more about some of the benefits unsecured cards offer can be advantageous.
1. Use them Anywhere
One of the biggest benefits offered by unsecured credit cards is that they can be used anywhere credit cards are accepted. You can even use these cards online, making them appealing.
Keep in mind, there are department stores and online retailers that offer their own unsecured credit cards. These are only accepted by these businesses.
2. They Help You Build Your Credit
If you are approved for an unsecured credit card, they can actually help you build your credit. The best way to do this is by making payments on time and keeping your balance low.
If you fail to pay your credit cards on time, they can also have a detrimental effect on your credit. Be sure to keep this in mind. If you don’t think you will be able to make the payment, don’t use the credit card.
3. Lower Fees
Most unsecured, no-deposit credit cards have lower fees than secured ones. This is because you have to prove your creditworthiness before you can receive it.
When you receive the card, you are rewarded for your good credit with lower fees. In the long run, this can actually help you save money. Also, there are some cards that don’t charge interest if you pay your balance within a certain time period (usually 30 to 60 days).
4. Higher Credit Limits
If you opt for a secured credit card, your credit limit is typically limited by the amount of cash you put down. However, with an unsecured card, this isn’t the case. This is another factor that’s based on your creditworthiness.
Also, with a no deposit credit card, you can receive limit increases when you establish a good track record of making payments on time.
5. Perks and Rewards
There are many cards that offer you perks and rewards just for using them. You will find cards that offer cash rewards, airline miles, points towards purchases and more.
Do You Qualify for No Deposit Credit Cards?
The best way to know if you can qualify for a no deposit credit cards is to check your credit score. There are also some creditors that will allow you to apply without impacting your credit score (at first). To actually receive the card, most lenders will eventually require a hard inquiry, which will impact your score.
If you want this type of card, just be sure to understand all the details. This will eliminate the possibility of surprises when the payment is due. More information about no deposit credit cards and others can be found on our website.