Having bad credit can really put you in a bind. Your credit history shows late payments, over limit balances, and more so it’s hard to get new credit. However, you need new credit in order to show that you can change your ways and start to pay on time. What should you do if you find yourself in this position?
You might try to find a bad credit credit card. Bad credit credit cards are designed specifically for people to rebuild bad credit. It’s one more option to consider, while it might not be a good idea for everyone. Here are some of the details about getting a bad credit credit card.
To find lenders that offer this type of card, you can do a search on the web, or you might even already be getting offers in the mail designed for people who have bad credit. When you’re looking through bad credit offers, there are a few things that you should look out for to make sure you’re getting the best deal and the right deal for you.
The first thing to check is to see if the offer you’re reading is for a secured card or an unsecured card. If your credit is really bad, it could be difficult to get an unsecured credit line. This means that you are given a line of credit without any security to back up the banks risk. That’s why banks also offer secured cards. A secured card is one where you put a deposit into the bank issuing the card, and they give you a credit line equal to the amount of your deposit. This way the bank is secure in knowing that any money you don’t repay is covered by your deposit.
Another thing to look for are the fees involved. Some of these bad credit credit cards will have application fees that can be anywhere from ninety five dollars to two hundred dollars and sometimes even more. If you are being charged an application fee that is as high as two hundred dollars, you should really consider whether it’s worthwhile. That kind of money might be better put to use by paying off some existing debt that you already have. Generally, try to find a card that does not have an application fee at all.
The next thing you should check is the interest rate. Sometimes, products will list the interest rate that will be charged to a bad credit borrower, but other times the lender will ask you to apply before they can determine what rate they’re willing to give you. If this is a company that is charging a large up front application fee, try to get a straight answer on the interest rate before you pay them any money, or see if you can get a refund of the application fee if you don’t the terms that they offer you later. There’s no reason to pay them money up front and then get a card that’s outrageously high on interest rates.
Another fee that you might see charged on bad credit credit cards is a monthly maintenance fee. This fee is really just extra cash to the lender. Maintenance fees can be anywhere from $19.95 per month and up. Just remember there is no additional work that needs to be done on your monthly credit card bill that a lender isn’t already doing for people who don’t get charged the monthly maintenance fee. This is fee that is only charged to bad credit customers because they’re considered to be desperate and willing to pay just about anything to get a credit card. It’s recommended that you apply for cards that do not have a monthly maintenance fee.
Another charge that you see for credit cards generally is the annual fee. When you have bad credit, the annual fee that you are assessed may be high or low. This is because the bank is getting its money from all the other fees and high interest rate, so it may try to lure you in with what looks like a low annual fee. Expect to pay anywhere from forty nine dollars to ninety nine dollars or more for your annual fee.
As you can see for a bad credit borrower the fees and costs involved in getting another credit card can be very steep. They don’t have to be though. There are plenty of credit card products available for borrowers with poor credit or bad credit that don’t have extremely high fees. If you are trying to dig your way out of debt, and pay off bad credit from your past, to spend two hundred dollars, three hundred dollars or more just to get a card issued to you is money that is probably better placed elsewhere. However, if you have no other options, and really need to demonstrate that you can pay back credit in a timely way and manage your credit better to improve your credit score, some of these high priced products might be worth the cost of getting it.