Bad Credit Credit Card
Home & Mortgage
If you are trying to rebuild credit, getting a bad credit credit card is a good way to start the process. Regardless of your credit, today there are plenty of bad credit credit card companies willing to set up a new account for you. The trick will be to make sure you aren?t being really overcharged on fees, penalties, interest rates and more as these cards can be expensive. Don?t just take the first card offered to you, read below to see how to compare bad credit credit cards and choose the best deal.
Some lenders rely on the fact that you may have very bad credit, and that you don?t believe you can get a regular credit card. They charge all kinds of outrageous fees, as much as $200 on your first statement, simply to open the account. Bad credit credit card companies will charge fees such as a high annual fee, a one-time application fee, a monthly fee, and on top of everything will also charge you a high rate of interest in excess of 10% for example.
If you know where to look for a card, you can find a good deal even if you currently have a serious credit problem. Most card companies will look at your credit rating, and your income, but for bad credit credit cards, the most important factor will likely be your income. If you can demonstrate that you have the money to pay the card each month, the lender is more likely to give you a card.
If your credit history is bad and you also don?t have the income to support a new credit card approval, you can apply for a guaranteed, or secured credit card. These cards require that you put down a deposit in the amount of the credit line you request ? usually about $300. The bank keeps your cash on hand in case you fail to repay the balance, in which case they will just keep your deposit. However if you can demonstrate a good credit history, it is possible that you will be able to move up to an unsecured card at some point.
When you are looking for a card, be sure to check the terms of the different offers before you apply. You don?t want to have several card companies pulling your credit report, which causes a negative impact on your credit score.
Compare the following fees when you look at a bad credit credit card offer: the interest rate charged; the annual percentage rate, which includes all the fees you must pay as well as the interest rate; the annual fee; the interest rate if you are late with a payment; the interest rate if you go over limit; any application fees; any other monthly fees; and penalties charged for late payments other than an interest rate increase. List all of the fees for each card, and determine which will get you the best deal. Start with the best offer, and apply to that company, rather than all of the companies at once. Most card companies can get you a reply almost immediately, especially if you apply online.
If the terms of the credit card are too expensive, rethink your need for a card. If you have a history of bad credit, getting a card that is impossible for you to pay is just a recipe for disaster, and will likely result in another debt you are unable to pay. The purpose of the card is to help you rebuild your credit, so taking out a card that starts you off with a $200 balance as a result of fees, for example, is probably not a good idea.
One last point to remember is to apply for a card with a reputable company or bank. Many large banks now have related companies that handle bad credit credit card products. They realize there is a market for these, and offer a variety of programs from secured to unsecured cards even for individuals with bad credit. A reputable bank, or a larger bank, has the financial ability to offer programs with better terms to bad credit credit card customers. Avoid the many card companies that rely on getting customers who think they can?t qualify for decent terms, and make their money on charging high interest rates an other fees. If you haven?t heard of the lending bank before, work with a bank you do recognize first to see if you can get a better deal.
Once you?ve received your bad credit credit card, you must remember that the purpose of this card is to rebuild your credit. Make sure you pay every month on time, even if it?s just the monthly minimum. Once your credit history starts to improve you?ll find better credit offers will become available.
MF Calhoun writes for FixItYourselfCredit.com. Find more information about choosing the right bad credit card by going to http://www.fix-it-yourself-credit.com/badcreditcard.
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