Bad Credit: No Problem Credit Cards

Bad Credit: No Problem Credit Cards

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A credit score of under 550 has you in bad credit territory. Likely, you have a few dings on your record including a late payment, an overdrawn account or insufficient funds. As a result, your score has taken a beating and you are doubtful that you will ever get a new credit card.

Well, there is some good news for beaten down consumers: you can get a credit card, including one especially designed for people with bad credit. What you should know is that these cards do not mean that you are a bad person. Rather, you have had some problems and still need access to a line of credit. Here is what you need to know about credit cards for consumers with bad credit.

1. No application fee. Typically, for applicants seeking a bad credit credit card, financial institutions will charge an application fee. You should also know that you can ask to have that fee waived. Yes, they will do it if you insist.

2. Low annual fee. Some credit card providers charge a high annual fee for people with bad credit. You, on the other hand, can find a card that charges a low annual fee. A low fee might be $29 a year which comes out to just over $2 per month or what you pay for just one cup of iced coffee these days.

3. A reasonable security deposit. Why would a bank issue you a credit card if you have had credit problem? That’s easy: you agree to assume some responsibility by putting up a security deposit, what can range from $49 to a few hundred dollars. What this does is to assure banks that you have “skin in the game” and gives you an opportunity to get a credit card that you might otherwise not receive. Shop for a card with a lower security deposit, money that you will get back anyway after a predetermined amount of time.

4. Credit line increase. Wouldn’t you know that after all your work that all you can get is a $500 credit line? That can be a disadvantage for bad credit credit cards, but the good news is that you can usually get your line increased within a few months. Simply show responsibility by paying off your balance each month. Then, after six months ask the credit card issuer to raise your credit line. It is that simple.

5. High interest rates. The big disadvantage of a bad credit credit card is the interest rate. Those rates can easily top 20 percent, an amount that can frustrate some borrowers. Even so, the interest rate does not need to affect you. How? By paying off what you borrowed each month. Your interest rate is tied solely to your credit, but it won’t matter to you if you do not use your card to carry balances forward each month.

Credit Card Considerations

You should also know that not all bad credit credit cards are available in every state. Some states restrict the types of cards that can be issued or at least limit the interest rates, making such applicants more of a risk. Shop around for a credit card and do not allow your poor credit to limit your choices.

With careful use, you can reestablish your credit and increase your credit score in no time. The advantage here is that you won’t need to shop for a new credit card as your credit card for poor credit will become one for good credit. Even so, you can also shop for another credit card once your credit rating has improved.

See AlsoHow to Buy a Home With Bad Credit

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