What is the difference between a secured credit card and an unsecured credit card?
There is a big difference between secured and unsecured credit cards. A secured credit card is one that requires a deposit to be held by the credit card issuer as collateral. The amount of the deposit is usually at least as much as the credit limit on the card. This means that if the cardholder fails to make payments, the lender can take the money as payment. An unsecured credit card does not require a deposit, and the lender does not have any collateral to back it up. In Tennessee, credit card laws have a few differences from the national laws. For starters, credit cards are considered unsecured debt in Tennessee, while in most other states they are considered secured debt. This means that in Tennessee, if a cardholder fails to make payments, the lender cannot take the deposit away. Also, in Tennessee, an unsecured credit card’s interest rate cannot be higher than 18%. This is to protect consumers from predatory lenders. The law also states that any fees associated with the card must be disclosed to the consumer. In conclusion, an unsecured credit card is one that does not require a deposit, and the lender does not have any collateral to back it up. The difference between a secured and unsecured credit card in Tennessee is that the unsecured card does not have a deposit or collateral, and the interest rate cannot be higher than 18%.
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