If you have bad credit, you can still get a credit card. You should be aware, however, that credit cards issued to people with bad credit may have higher percentage rates with higher fees attached. In other words, the terms of the credit card are not always beneficial to you.
Since the beginning of a turnaround in the economy has begun, banks have felt more secure in expanding their base by giving credit cards to people that have bad credit. The trick is in finding one that is good for your pocketbook and does not drain your bank account with excessive fees.
It should be taken into account that although these banks are beginning to offer more credit cards to those with bad credit, they are taking a risk. The importance of making payments on time and being responsible for your spending should be considered before you begin using a new credit card. Banks have done more than just expand their credit card base; they have also given more credit to existing subprime credit card holders.
What You Should Know
Not even a year ago it was nearly impossible to get a credit card if your credits score ranked you in the subprime category. As it turns out, the banks need credit card uses just as much as consumers need more credit. If you are considering applying for a new credit card, you may want to do some research and try and find a bank that will give you a lower interest rate and lower fees. This will be tough but well worth your effort.
Even consumers with fair credit, which ranges from six hundred and twenty to six hundred and fifty nine, are going to have a hard time finding an annual percentage rate that is not high. On average the annual percentage rate for those with fair credit is about twenty percent. Those with good credit get an annual percentage rate of seventeen percent, and consumers with excellent credit receive an annual percentage rate of thirteen percent.
The annual percentage rate is not something you want to generally focus on when you are trying to build your credit back up. The focal point should be on paying your balance off each month. Then the annual percentage rate will not be as unaffordable. The hidden money snag will then shift to fees. Fees range from credit card to credit card. However, if you can find a credit card with fees in the range of forty dollars per year then it is well worth the consideration.
The drawback to having bad credit is that you will more than likely be offered credit cards with high fees and interest rates that are very high, as well. Some excessive charges can total up to two hundred dollars a year. As with any fine print, you should read it well so you can find the best credit card for you. Circumstances you may want to watch for are changing fees. Fine print can explain that the lender has every right to change your fees and increase them whenever they choose. This is something to be considered before you pick a credit card.
You may wish to look into a secured credit card instead. A secured credit card is a credit card that you put a balance of money on before it can be used. In essence, you are securing your own money and using it. These types of cards tend to have much lower interest rates in comparison to unsecured credit cards.
The Best Credit Cards for Bad Credit
Credit cards are more popular these days than ever before, even if you have bad credit there is still a credit card out there for you. One important thing you need to keep in mind is before applying for any type of credit card, you will want to know where your credit score stands. This can be done at any of the three major credit report bureaus. Once you find out your credit score, then look around online and see what your options are.
There are numerous credit cards available, but you want to find one that will benefit you. Be sure to check out the fine print on any credit card. Some companies who claim to offer no introductory APR and other gimmicks usually have some kind of catch if the cards are for people with bad credit. Below are cards that are offered for people with bad credit.
Capital One secured MasterCard
This card is like having both a secured and unsecured card, which is great because you can benefit from the card in many ways. The yearly fee for this card is low at only twenty nine dollars, while other cards that are secured will require a deposit of about two hundred dollars.
Your credit line of two hundred dollars will stay the same, even though you have not paid that amount. If you decide to deposit more money, like one hundred to two hundred extra dollars, this will allow you an increase in your credit line of up to about three thousand dollars. This card also reports to all three major credit bureaus, which is great for you if you are trying to rebuild your credit.
Citi Secured MasterCard
With this card, the company invests your money in a CD. With this in mind, there is a low twenty nine dollar annual fee, but there are no fees for monthly maintenance. With this card you will have to remember that the APR is rather high with an 18.24 percent rate.
If you intend on carrying a balance, then you need to choose another card with a lower rate. The main purpose for this card is for people to rebuild their credit, and with the investment in the CD, you will be getting something back in return. The great thing also about this card is the company will consider advancing you to a better card after a period of eighteen months.
Capital One cash rewards for newcomers
This card is intended for people who are new to the United States, but is also for anyone that is searching to build their credit score up. Understand though that the high 24.9% APR is incredibly high even for a high risk card, although there are no annual fees.
The card does offer one percent money back on any purchase, plus two percent money back on all travel purchases. The company will also report to all three major credit report bureaus.
To begin rebuilding your credit, apply for one of these cards. As long as you make your monthly payments on time, then your credit score should start to show improvement. Once the score improves, you will be eligible for better cards.