selecting a credit card

Secured vs. Unsecured Credit

Credit comes in different forms: "Secured credit" is often used to buy expensive items like a home or car. This type of loan is secured by collateral, such as the car or home you are buying. You may forfeit this collateral if you don't repay the loan as promised. "Unsecured credit" doesn't require collateral. What form of credit are credit cards?

1. Unsecured credit

2. Secured credit

3. Semi-secured credit

"A" is correct. Because credit cards don't require collateral, they often involve a higher rate of interest than secured loans. They are revolving or "open ended" credit lines you can borrow from as long as your account is in good standing. Your minimum monthly payment is based on the current balance.