What is the difference between a secured and an unsecured credit card?

In West Virginia, credit card laws exist to protect consumers from unfair practices and to ensure responsible use of this type of debt. Credit cards can be either secured or unsecured. A secured credit card is one that is backed by collateral, such as a bank deposit or other asset. When applying for a secured credit card, applicants are required to provide collateral in the form of a refundable security deposit paid directly to the lender. This deposit serves as collateral should the borrower default on their payments. An unsecured credit card does not require collateral. Instead, the lender assesses the creditworthiness of the borrower and sets a credit limit based on that assessment. This means that borrowers who have good credit score may get higher limits than someone with bad credit. The difference between a secured and an unsecured credit card is the requirement for collateral from a secured card, which puts the lender at a much lower risk in the event of default. This also allows the lender to impose lower interest rates and fees than an unsecured card. On the other hand, an unsecured card does not require collateral, but borrowers with lower credit scores are often charged higher fees and interest rates.

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What is the difference between a secured and an unsecured credit card?

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