Bad credit credit cards
Many of us, for whatever reason, end up with less than excellent credit.
Don't despair! A few wrong steps along the way don't ruin our chances of
ever getting a credit card. That's a blessing because having a credit
card provides more flexibility in purchasing decisions, access to money
in emergencies, and the opportunity to rebuild credit history and
improve our credit profile.
You don't even need to have bad credit to be looking for bad credit
credit cards. No credit, as far as credit card companies are concerned,
is just a damning. If you have never needed to borrow, getting a credit
card for the first time can be as difficult for you as it is for a
person with a poor credit record.
Getting a bad credit credit card is not difficult, and you don't even
have to wait until an offer lands in your mailbox to apply for one. You
can apply online or by phone.
Higher interest rates
Because credit card issuers have either a poor report or no report at
all on you, they charge higher interest rates to cover their increased
risk. Many bad credit credit cards carry interest rates in excess of
close to 20%. Avoid carrying a balance on these cards. If you can't pay
off the balance every month, you are spending more than you can afford
and you need to stop using your credit card until the outstanding
balance is paid off.
Some cards have annual fees. Whether or not you should accept one of
these depends on a number of things. For one thing, do you expect to
carry a balance? If the answer is yes, you might find that a card with
annual fees has a lower APR and may make more sense. And if there is a
fee, what's your credit limit? It doesn't make much sense to pay a $50
annual fee if your limit is $500. That would represent 10% on top of
whatever APR the lender charges.
Look for low rates
Even if you don't expect to carry a balance, look for the lowest rate
you can find. You never know when an emergency can force you to carry a
Orchard Bank and Household Bank are owned by the same group that owns
Household Finance and Beneficial Finance. There MasterCard carried an
APR of 20.65% (May 2005 rate). But there is also an annual fee ranging
from $0 to $79, depending on credit record. There's also an application
fee ranging from $0 to $49. This card may be beneficial if you can
afford to pay it off every month.
Aspire Gold Visa card carries a heft annual fee of $150. There's also an
account-opening fee of $29.50 and a monthly maintenance fee of $6.50,
which is $78 a year. Fees, excluding default fees, amount to $257 per
year. APR in May 2005 was 20.75%. If you don't mind paying the fees to
establish a good credit history, this card might suit you. If you plan
to carry a balance, look for something cheaper.
Once you get a credit card, make sure you pay all your bills on time,
not just the credit card bill. All lenders look at the entire picture
when assessing the credit risk you pose. Also, soon after you get your
first credit card, you will start to receive offers in the mail from
other card companies. Keep the number you accept to a maximum of three,
and keep those to widely accepted cards such as Visa, MasterCard,
Discovery or American Express.