Finances Tips for The Average Joe

Credit Card Options for People with Bad Credit

it is the policy of banks and most credit card companies to only offer credit cards based on good credit standing. Your credit card application will not be approved by banks or credit card companies if you have a bad credit history. The good news is that people with bad credit can still apply for a credit card from some companies.

Having a bad credit score makes you a high risk candidate for borrowing money on a credit card. If you want to apply for an unsecured card then this would mean an very high interest rate to compensate for the likelihood that you will not be able to meet some payment. You will also be given a lower credit limit. And you will not be given any perks that people with good credit rating enjoy. This includes cash back or air miles.

If you have a poor credit history, then a better option for you is a secured credit card. There should be some kind of security against the amount that you are going to borrow. The credit limit of the credit card is determined by the balance on a savings or current account. So, if you have a saving account with a certain amount of deposit, there are some card issuers who will set the card limit at a slightly lower amount that the deposit in your account. However, it may be different terns for different lenders so make sure to check their terms and conditions.

You may be able to increase your credit limit on your secured credit card by making further deposits to your account. There are some credit card issuers who will give you an increase in your credit limit even without increasing your bank deposit but only if you are making regular payments. It is according to the discretion of the lender to increase the credit limit.

One last option if you have a bad credit history is to apply for a joint account, often with a family member with a good credit rating. Financially, this is the best option as the terms will be the same as a normal card when it comes to interest rates. Make sure that you don’t miss out on your monthly payments. If you fail, the co-signatory will need to make the payments on your behalf. If he fails to do this, then both credit histories will be affected.

It pay to shops around for the best card for bad credit. You can be charged an application fee and annual fee on a secured credit card. Although these fees are small, you should beware of some less reputable credit card issuers that take advantage of your troubles and charge you with very exorbitant costs.

Now that you have a credit card with bad credit, you have an opportunity to improve your credit score by being responsible to pay your monthly dues.

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