Bad credit credit cards–are there really credit cards for people with bad credit? It can be tough for those with bad credit. Situations out of control can arise that may ruin a person’s credit for many years to come. Whatever the situation, there are solutions to help rebuild creditworthiness. There are credit card companies that believe in offering a second chance to those who end up in these sticky situations. Conduct a little research to determine which credit card offers the best benefits.
Credit Card Considerations
Many companies defraud customers out a great deal of money in order to receive a credit card. Make sure that the rates and fees are determined before applying for the card. Having bad credit does not make it necessary to settle for unfair credit card rates. The following are tips to prevent credit card scams:
· Determine the Costs
Potential cardholders must consider that fees for late payments and charging over the limit, as well as annual fees and interest rates for using the credit card. Expensive fees can decrease the amount of available money to spend.
· Avoid Low Introductory Rates That Change
Low rates usually last for a few months and the new rate increases to the maximum allowed by law. Bad credit credit cards may have hidden charges with many restrictions for using the card.
· Apply For Cards That Report to Credit Agencies
Credit cards that report payment or credit history to credit agencies help to rebuild credit. Those that do not report to these agencies can do nothing to restore creditworthiness.
· Apply for Cards That Allow Account Upgrades
Non-secured credit cards are the ones in which those with bad credit usually do not qualify. Paying on time may allow an account upgrade. After a year, many are allowed to upgrade to a non-secured credit card. Make sure the credit card companies offer this option so payment information can be reported to credit agencies.
How to Get Approved for a Credit Card with Bad Credit
There are several options for credit cards for those with bad credit. Credit card companies may or may not look at credit scores unless applying for an unsecured credit card. If approval is denied, alternative options are available. The following offer ways to get approved for credit cards for people with bad credit:
· Apply for an Unsecured Credit Card
Unsecured credit cards are the traditional credit cards. Credit score is the main determining factor in approval. If denied, add a 100-word statement to each credit report explaining the situation that led to late payments or default. Credit issuers are supposed to consider this information when pulling credit. Creditors are usually considerate if illness or divorce led to payment issues. Bad credit does not necessarily prevent issuance of this card.
· Apply for a Prepaid Credit Card
Those with bad credit cannot be denied this option. Money is added to a prepaid credit card and customers can spend it just like money. There are no annual fees or interest rates. Cardholders can only spend the amount of money placed on the card. There may be a small fee to activate the card but no others. The only downside to this card is that the payment history is not reported to credit agencies.
· Apply for a Subprime Credit Card
This is a very costly option. Potential cardholders are approved for this card based on the ability to pay upfront costs. The processing fees may not be worth receiving the card. Laws prevent credit card companies from charging more than 25% of the card limit in upfront fees. Credit card companies may raise fees after the first year to limit risks. Some companies charge over 70% APR.
· Apply for a Secured Credit Card
Approval of a secured credit card depends of the potential cardholder’s ability to pay a security deposit, usually between $300 and $500. The payment history is reported to the credit agencies so the cardholder’s credit can increase with timely payments.
· Apply for a Debit Card
Many debit cards double as credit cards. Credit does play a factor in approval, but the cardholder’s credit usually does not have to be as high as it needs to be to apply for a traditional credit card. The card spends just like a credit card, but the cardholder must pay expensive fees for over limit charges.
Best Way to Apply for Credit Cards with Bad Credit
- Do not apply for too many credit cards that pull credit. Even if approved too many inquiries can lower credit scores.
- Search online for the credit cards with the best rates and low fees.
- Stick with credit card companies that have good reputations.
- Apply for cards that can help rebuild creditworthiness.
There are quite a few options to choose from for credit cards for people with bad credit. Having bad credit does not mean the end. These credit cards can help cardholders rebuild credit and self-confidence. Potential cardholders do not have to settle for less due to bad credit.