If you have bad or blemished credit, getting a new credit card can be difficult. Living without plastic is almost impossible, but rest assured there are lenders out there who will help you out.
Many Americans have credit blemishes or outright bad credit. There have always been lenders willing to lend at very high interest rates and fees to these risky clients – but now there are more banks willing to extend credit to individuals they see as a growing market. Believe it or not, there are banks who will open credit card accounts for you even if you are just out of bankruptcy, foreclosure, or other severe credit problems. It’s clear that many people have credit problems, and banks know that individuals with bad credit are willing to pay a higher interest rate plus high fees to get a card.
Remember, if you have bad credit already, you should make your credit card part of your plan to rebuild credit by getting a small credit limit and paying on time every month. Don’t just pile on to your existing debt by extending yourself even further. Make sure the credit card balance you apply for is manageable and one you can definitely pay each and every month. And, if you really have extremely bad credit, in the low 500’s say, you may still have trouble getting a card that doesn’t include extremely high interest and fees – rather than burden yourself with horrendous charges, you might think about getting a secured card instead of an unsecured card.
Before you apply for any credit card, be sure to compare the terms, rates and fees charged by each bank or lender. Just because you have bad credit does not mean you have to accept high fees and costs! You can still shop around for a good deal.
First, remember not to submit multiple credit card applications all over the place. Each time a lender runs a credit report on your, it will negatively impact your credit score. If you already have bad credit, don’t make it worse with lots of applications! Next, do your research. More than one company has a bad credit credit card program you can apply to, so find several deals to choose from before you apply.
After you identify several card companies who will offer you a bad credit credit card, compare the terms of each before making a final application. Compare:
– Annual rate
– Annual fee
– Interest rate charged if you carry a balance each month (instead of paying off the card every month)
– What the interest rate is for purchases vs. cash advances
– How high your interest rate will go up if you are late with a payment, and by how much
– How high you interest rate will go if you go over your credit limit
– When your payments must be made (that is, is your billing cycle 25 days? 30 days?)
Watch out for the fine print. Read the disclosure terms for each bad credit credit card application thoroughly to make sure you understand all of the charges. For example, a single bad credit credit card lender could offer an account for you with the following charges and fees: A $100 application fee; a 17.9% interest rate, which increases to 25.9% if you are late or go over the credit limit; a fee of $25 if you pay off your balance each month; a $49 annual fee; and a $50 fee if a payment bounces. With these kinds of fees each year, you could pay hundreds of dollars before you even use one cent of credit! Don’t put your personal financial health into jeopardy any further by taking deals like this when you don’t have to.
If you really have bad credit and can’t qualify even for a bad credit credit card, you might consider using a scored card. These cards are issued after you put money in the bank to secure your credit card debt. For example, you could deposit $300 to obtain a credit card with a $300 credit limit. The bank has it’s cash in hand to protect them against the possibility that you don’t pay the money back, and you have a revolving line of credit to use and pay off each month to rebuild a credit history. You will also get the $300 security back when you close the account or if your credit improves to the point where you don’t need to use a secured card any longer. Secured credit cards are a good way to go if you have few options and need a way to start building good credit again.
With either seured or unsecured cards, you can start to rebuild credit no matter what your credit history is, or how low your credit score. Whichever product you qualify for, it’s a good way to start over, improve your credit and begin to build wealth.
