HOW TO GET A CREDIT CARD WITH POOR CREDIT?
Credit cards have been established as a necessity in today's financial world. There are options available for people with bad credit in the form of prepaid, secured, and unsecured credit cards. It is important to know the difference between the three.
Prepaid Cards
Prepaid cards are convenient for online shopping, travel reservations, and daily shopping checkouts. They do nothing to rebuild credit rating. A deposit is sent to the card issuer and the amount sent is set as the credit limit. There are sometime monthly fees charged for the use of the card. The issuer does not report anything to the credit bureaus. There are cards for people that fill the gap between prepaid credit cards; secured and unsecured credit cards.
Secured Cards
Secured credit cards are cards that allow the consumer to set the credit limit by making a deposit (minimums are set by the card issuer). Deposits are generally as low as $200-300 and as high as $5000 or more. The deposit is used as collateral, which secures the account and reduces the risk of loss on the card issuer. The credit limit for the card is the amount of the security deposit. This can be increased usually by increasing the amount of the deposit.
With the secured credit card, the user will receive a monthly billing statement as you would with a genuine credit card. At least the minimum payment required must be applied on time monthly to avoid delinquencies and penalties. Paying the card timely results in the issuer reporting to the credit bureaus positively. Failure to do so continues the cycle of negative credit. In the case of default, the issuer is then forced to liquidate the debt by using the security deposit.
Unsecured cards
With unsecured cards, there is not a security deposit made to obtain an unsecured card. Credit limits generally start at $200. With payments made on time monthly, the credit card limit will gradually be increased by the card issuers' discretion. You can expect to pay higher interest rates and annual fees with these cards. They are a very good tool to help establish or re-establish your credit score.
The following should be considered when shopping for a credit card:
- Interest rates- the interest or APR( annual percentage rate) there is frequently a higher rate applied to cash advances, than for purchased transactions; it is best to pay the entire balance due each month.
- Credit limits – as previously discussed, credit limits are set by consumer with secured cards.
- Other fees – other fees to pay close attention to are annual fees, over-the-limit, account set up or programs fees.
Credit cards for bad credit can be very beneficial when trying to establish a credit history or
rebuilding credit. It is very important to research cards that are offered for bad credit. Read each review to narrow you searches. These cards are intended to be used as an instrument to reach an excellent credit record. It is sensible to discard them in favor of an improved option after a period of acceptable use.
If you would like more information about credit repair, or reestablishing credit after bankruptcy, feel free to call your Maryland Bankruptcy Attorney,
Montgomery County Bankruptcy Attorney or
Baltimore Bankruptcy Attorney.
The Aylward Law Firm helps individuals repair their credit.
Helpful links to visit:
Credit Report Review
Credit Card
Rewards Credit Card