For people with a spotty credit history or bad credit, getting
approved for a standard credit card can be difficult, if not
impossible. There are a number of credit card options that are
aimed specifically at people who have bad credit and are trying
to rebuild or repair it. There are also, unfortunately, a lot of
schemes to take advantage of the desperation to get a credit
card when no one else will issue one. How do you tell which
options are valid ones and which are just taking advantage of a
bad situation? Let's take a look at some the things that you
should be wary of below.
Catalog Clubs Disguised As 'Credit Cards' For People With Bad
Credit.
Some supposed credit cards offer to help people rebuild a bad
credit history by making purchases from their catalogs. Products
in the catalogs are often overpriced, and you can't use the
'credit card' anywhere else. While they will make reports to
credit card companies with your balance and payment history
which will help to repair bad credit, it can be a very expensive
way to acquire goods and clear up your credit history.
Prepaid 'Credit Cards' To Help People Repair Bad Credit.
Technically, prepaid credit cards are not credit cards, though
they may bear a Visa or MasterCard logo. They're more like a
debit card, without a bank account. The purchaser 'loads' the
card with a deposit, usually with a minimum of $20 and a maximum
of $500 to $5000. When you use the credit card to make a
purchase, the amount of the purchase is deducted from your
balance. When the balance reaches $0, you can't use the card
until it is reloaded.
Generally, you can reload the card at any time, though there is
usually an upper limit to the amount of cash that the card can
carry at any one time.
Secured Credit Card - The Best Option For People With Bad Credit.
A secured credit card is one of the best options for people
who've failed to get the approval for a standard credit card.
Your approval for credit is contingent upon a deposit in the
credit card company's bank. Your initial credit limit is usually
the amount of your deposit. As you make payments on time, the
credit card company may increase your credit limit to 150% or
200% of your security deposit.
Unlike a prepaid card, where you are actually spending your own
money when you make a purchase, with a secured credit card you
are buying on credit and reestablishing your credit history. The
security deposit is only touched if you default on payments. Be
sure to check around for the best interest rates, as they can
vary widely.
You will be faced with many options as you are trying to rebuild
your credit history, and unfortunately, many people have found
ways to take advantage of those people who are tying to turn
over a new credit "leaf." Don't let that happen to you!
Thoroughly research each of your options before making a
decision.
About the author:
Learn
Debt Consolidation and
other way to
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Mark Willigerod
