Credit cards have taking a beating lately. Many banks are seen as the evil monster gouging customers with high interest rates and fees. They were recently regulated by the federal government for changing interest rates at will. Consumers balked at the practices that banks were using indicating that many were doing them for exorbitant profits without concern for customers. As this occurred, more people have turned to unsecured personal loans.
When you apply for a credit card, you must complete an application. It doesn’t matter if the letter that arrives in your mailbox indicates that you are already pre-approved. This might be false. Your name was purchased from a sales list for people that meet certain criteria. They will still run your information through the major credit report agencies to locate your score. If it doesn’t meet their parameters you can be denied. Unsecured personal loans don’t require perfect credit scores and are preferred by those who need a loan. Sometimes the interest rates for credit cards can be as high as 28 percent. Many personal loans have interest rates that are half that amount.
If you already have a credit card and don’t make your payments on time credit card institutions have the right to lower your credit limit. If you use your credit card on a regular basis and depend on the credit limit, this can become a shock when this happens. Normally, they will tell you in your statement. But it may be weeks before you get the latest credit limit amount. You could get denied while trying to make a purchase in the checkout line at the store.
Credit card companies also have the right to raise your interest rate if you are late making the minimum payment amount. Previously, they also had the right to raise rates for a poor credit score even if you were making timely payments to them! It became so bad that the government had to regulate credit card companies and how they do business. Unsecured personal loans cannot be raised once the loan is finalized.
Identity theft has become an increasing problem for many people. Credit cards are one way that thieves can access funds from you and get your information. It can take weeks before the credit card company will straighten out the mess. Sometimes your account is closed and you have to wait for a new card to be issued to you. If you aren’t careful you could end up not being recouped for some of the charges. Or worse, you are treated as the criminal instead of the victim.
Credit cards were once the staple of the consumer. Now unsecured personal loans are taking precedent for the ease of approval, stable interest rates, and convenience. Many are able to use them as revolving lines of credit where ever they see fit. Because of the negative publicity many are also deciding to pay off their credit cards and cancel them. These are the main reasons that credit cards are declining and being replaced by unsecured personal loans.