Are there credit cards for bad credit? The answer is yes. If you have been over 30 days late on loan, charge card, or mortgage payments, if you have unpaid medical bills, or if you have legal judgments against you such as child support or other lawsuits, you may have “bad credit”. There are many of us who have been unable to keep up with our monthly bills and have fallen behind in the last 12-24 months.
You may be thinking there are no options or credit cards for bad credit. That is not true. Access to a credit card is almost required in this age of technology we live in. This increasing need for consumers to make credit card purchases creates the demand for more and more credit cards for bad credit.
There are three types of credit cards that are available for people with bad credit. The first type is called a prepaid credit card. With a prepaid card, you get out of it exactly what you put in. Similar to a checking account, you deposit a certain amount of money into an account and this is your spending limit. When your prepaid credit card balance reaches $0, you can “recharge” it by depositing more money into your account. Prepaid cards are great for budgeting, online purchases, and those that cannot obtain a conventional checking account. Approval is usually guaranteed regardless of your credit score and there is no need to deal with the credit bureaus.
The second type of card you can obtain is a secured credit card. With a secured card, you deposit a cash amount into an interest-bearing savings account. This amount becomes your collateral. You are then issued a card and a line of credit in the amount of your deposit. When you make purchases, your credit limit decreases, monthly payments are calculated, and you are sent a bill. If you make purchases, a monthly payment is expected just like a regular credit card. Secured cards are great because they function like regular credit cards allowing you to book travel arrangements such as hotels and rental cars that do not accept prepaid cards or debit cards. Like prepaid cards, approval is usually guaranteed regardless of your credit score. Unlike prepaid cards, many secured card issuers report payments to credit bureaus. This can be a great way to establish or re-establish your creditworthiness by showing timely payments. After several consecutive timely payments, many secured card issuers will increase your credit limit without requiring an additional deposit.
The third option is an unsecured credit card. This is a regular charge card that does not require a deposit, and your credit score is taken into consideration. If you have bad credit, the limit on an unsecured card may be lower than a person with good credit, and you may be subject to slightly higher interest rates and/or fees, but the advantage is that you will not have to make any kind of deposit up front. Many unsecured credit cards for bad credit come with credit limits up to $1000. Making small purchases and timely monthly payments can help you re-establish creditworthiness as most unsecured card issuers report your payments to the credit bureaus.
By: Ken S
Posts Tagged ‘Types Of Credit Cards’
Credit Cards For Bad Credit – What Are My Options?
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Does your less than perfect credit history concern you? Then you should allow bad credit cards to help you make your credit rating better. For both individuals looking to make purchases and business establishments trying to keep sales strong, using them is the most preferred option since it helps both groups keep their credit scores high. Those identified as high-risk credit card users are also aided by these cards, since they work just like normal cards. Anyone who uses credit cards and whose current credit score is 550 or below should consider using bad credit cards.
Taking a Step
Since people with poor credit often have difficulty obtaining more traditional credit cards, many turn to other options like prepaid debit cards, First Premier Bank Cards, and other secured credit cards. Although “bad credit” cards have higher interest rates and lower credit limits, don’t let that deter you from taking full advantage of them. They can be used just like any normal credit card. However, if used incorrectly, they can cause serious financial problems that may make things worse for you in the end.
Analyzing the Myths
One of several false beliefs regarding these cards is that they are not a good financial backup. This has changed more recently, however, since they do not always appear exclusively with extremely high interest rates. For this reason, they should not be considered bad financial tools. Owing to the appearance of more and more companies offering these types of credit cards, individuals looking to apply for a line of credit can select the card that best matches their needs. In order to do this, the customer must first do their homework and analyze such essentials as yearly fees, financing fees, credit necessities, opening offers, accessibility of online banking, and other applicable information about the credit card offer.
Enjoying the Benefits
Taking all factors into consideration, it can be said with certainty that any disadvantages presented by bad credit cards do not eclipse the financial benefits. An individual with a low or no credit score has much to gain using them, like:
-First and foremost, you will be aided in your efforts to raise your credit score.
-Besides that, by putting yourself into a situation where monthly payments are easier to make on time, you will eventually be able to call yourself a low risk candidate for lenders to consider.
-Furthermore, future opportunities at obtaining loans will become surer. By using these cards for all your small, low price purchases over the course of one or two years, you can reestablish a good financial condition by improving your credit rating and score.
All of the information mentioned in this article signals the usefulness of these cards for anyone whose credit history has been less than perfect. Really then, bad credit does not end your financial future. Credit can be rebuilt and your chances of being approved for a loan greatly improved.
By: W. M. Blake
