Credit Cards with Bad Credit: Really?
Yes, one can get credit cards with bad credit – really. There has been a paradigm that has been getting more and more credibility; it’s that people with bad credit don’t get more credit extended to them. This is not true (with both cards and loans for people with bad credit). There is one notable extension and that is if you are in bankruptcy and have not been released from that bankruptcy then you cannot borrow more money. But if we are talking about “regular” bad or poor credit then you can almost for sure get a credit card with bad credit.
How? Well there is a product specifically designed for those with credit issues to attain a special credit card to help them re-establish (or in some cases establish) credit. It is called a secured credit card. Now, don’t freak out and think you need a home or house to get one because you don’t use that to secure the credit card. So the next obvious query is then what do you use and how does it work? That’s a good question – continue on and I’ll answer that.
Credit cards that are secured are meant to help people with credit problems so it is less focused in a person’s credit rating. Yes they do look at your credit but that is determined how much security the secure credit card company will ask for. The credit card security needed is simply cash! How much, well that depends. Like I said: if you have very bad credit then it will probably be a one to one ratio; meaning one dollar of cash would be needed for every one dollar of credit extended. There can be a limit on the total amount of credit extended as well; a number I have heard that maybe still valid is a minimum of $75 and an upper limit of $750.
What is the catch then? Another good question because like a credit there is a cost. There are additional fees compared to regular credit cards. The following is general idea and not necessarily an exactly what you may encounter. In my experience there was a yearly fee of about $30-50 dollars and there was an interest rate of 28% per year compounded monthly (if I remember, but it might have been daily). One other point to note was that no interest was accrued on the cash deposited for the bad credit credit card. As said before bad credit costs more and in some cases a lot more than good credit.
One should also consider that revolving credit can become a problem if uncontrolled spending is how one got the bad credit problem in the first place. Poor credit secured credit cards then, are too been seen as a tool in the tool box. Depending on your situation and your habitual financial patterns it may or may not be a good fix for you. Secured bad credit credit cards can be a god sent to some and the worst idea ever to others. This is why bouncing ideas off someone that knows you and you trust is a good idea, and checking with an unbiased credit professional is a good idea too. So in the end credit cards with bad credit may or may not be right for you – you decide.
Popularity: 1%
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
