What good is a credit card when you cannot buy now and pay later? Therein is the difference between a secured credit card and an unsecured credit card. When you use an unsecured card to buy a particular product or service that credit card provider has advanced a particular sum of money that they are willing to provide to you in the form of a short term loan.

If you exceed that amount of allowable credit there is a good chance that your credit card provider will not approve your purchase and will most likely charge you a penalty if such a purchase is allowed that caused you to exceed your credit limit.

If you do not pay that credit card provider the following month for the purchases you charged the current month you will be assessed an interest charge on the balance due. If you make no payment a penalty fee will also be assessed and added to your balance due.

Therefore, it is wise not to charge any item that you can pay cash for at the time of purchase. Do you pay your bills this month using next month’s income? That is exactly what you are doing if you charge everything that you pay for.

If you have a checking account the bank will also, in most cases, provide to you a debit card that you can use to make purchases which will subsequently be subtracted from your checking account. It is possible that you might overdraw your checking account, causing that bank to assess a fee for an overdrawn situation. Such use of your debit card can cost you big money in the form of interest and penalty charges if you spend more money than you have in your checking account. Such is also the case if you write a check for an amount that exceeds the balance in your checking account.

Your debit card is a secured credit card in that you have prepaid the amount and you can now pay for what you purchase using that debit card rather than writing a check. So too, some vendors will not take checks as payment but they will allow you to use your debit card if they have the proper equipment to process your purchase.

The use of a secured credit card or an unsecured credit card puts you at risk of being a victim of identity theft. However, if you do not have cash money in your wallet a criminal who robs you will get only your debit card which is useless to him or her. Therefore, it is wise to write a check as payment to those who provide goods and/or services to you or simply pay cash for whatever you buy.