When you need to borrow money, your bank gives you several different types of loans to choose from. Here's what each is best at.

Secured Credit Cards

A secured credit card spends like a credit card but requires you to have a deposit locked in a savings account or certificate of deposit. While your secured credit card is open, you can't withdraw your deposit. If you don't pay your card, the bank will use your deposit to pay it off and close your card.

Sometimes, the deposit is equal to your credit limit, and sometimes it's only a percent of your credit limit. This makes secured credit cards best not for when you truly need to borrow money but when you're trying to build credit or open a credit card for convenience.

Regular Credit Cards

Regular credit cards allow you to spend up to the credit limit and then pay interest if you don't pay the balance off in full each month. The interest is much higher than other types of loans, so you should only make charges you can't pay off in cases of true emergencies.

Another situation where a credit card might make sense is things like auto insurance that give you a discount for paying ahead of time. If you put your full annual insurance charge on a credit card at once instead of paying the insurance company monthly and paid the card off over the year, the discount might be bigger than what you pay in interest.

Finally, many credit cards offer cashback or other rewards that can be useful if you always pay in full and never pay interest.

Secured Loans

Secured loans are loans like mortgages and auto loans. The loan is secured because if you don't pay the loan, the bank gets to repossess and sell your house, car, or whatever you bought with the loan money. These loans often have the lowest interest rate because the bank has less chance of losing money when the loan is secured by collateral.

When you need to make a major purchase, a secured loan is usually the best option. You can also use a secured loan, in the form of a home equity loan, if you need to make major repairs to your house and don't have available cash.

To learn more about the loan and financing options available to you, talk to your local bank today.