Find the best credit card when you have bad credit
People find themselves in financial difficulties due to sickness, unemployment, identity theft and overspending. Many businesses today require customers to have credit cards even the ones with poor credit history. These include online retailers, hotels and airlines among many other businesses. Some banks have made profits from issuing credit cards to customers who have bad credit and are willing to give them another chance of using viable credit cards as they repair and strengthen their credit score. You can find the best credit card for bad credit that will fit within your budget, from a bank which offers these cards.
Secured credit cards
There are lenders who offer secured credit cards based on deposits in the customers' savings accounts which reduces risk for the banks. Secured credit cards require the customer to put down a security deposit which the bank uses to recover their money when the customer defaults. These secured credit cards are easy to get and are a good option for customers who cannot obtain regular credit cards due to poor credit. They are an alternative to regular credit cards. These cards help people with poor credit history repair and improve their credit score because the financial transactions are reported to the major credit bureaus. These cards are accepted where standard credit cards are accepted.
The consumer builds credit history by paying monthly payments on time and correcting errors and misrepresentations on the free credit report. You can strengthen your credit score as you use the secured credit cards so you will qualify for better terms and higher credit limits. The secured credit cards are charged application fees, annual fees and processing fees. Read the terms and conditions carefully to know the fees charged and avoid committing yourself to credit cards with high fees which will require you to pay the monthly payments on time so you can repair your credit with time to be able to get approval for unsecured credit cards.
The best secured credit card will allow you to convert the card to an unsecured credit card which charges lower fees and has fewer restrictions, when you pay the monthly payments on time and your credit rating improves. Ensure that the credit card company reports the payments to the major bureaus so your credit rating can improve.
Unsecured credit cards
People with poor credit can get approval for a fee-based unsecured credit card without requiring a cash deposit in a savings account especially if the customer has been using a secured credit card for some time. This gives the lender some trust if you have been paying the minimum monthly payments on time. Most of these unsecured credit cards do not require the customer to put down a security deposit but the interest rates may be higher because there is no security. The rates also depend on the customer's credit score which improves with time. Some credit card companies issue unsecured credit cards to consumers with bad credit but charge upfront processing fees and high interest rates. The annual fees and APRs range from lowest to highest rates.
Prepaid Debit Cards
Prepaid debit cards are good for consumers who do not want to carry their credit cards or charge cards with them.
Use the credit card tables to help you find the best credit card when you have bad credit which fits within your fees and security deposits budget.