Bad Credit Cards For Better Consolidation
Unsecured methods of debt consolidation are among some of the most available debt consolidation options out there because they do not require you to secure the debt against anything.
This is in contrast to secured loans such as mortgages which require you to put something up as collateral or security.However, unsecured loans have a major qualification in the form of a good credit rating.
You got to have a healthy credit score before you can even consider getting a credit card with a decent interest rate. If your credit score is bad enough that you cannot get a good credit card anymore, there is a fix available for your situation. The solution comes, as ironic as it might sound, as a bad credit card.
Why Bad Credit Cards?
Now, do not take the term the wrong way. Bad credit cards are not bad per se or detrimental to your credit score. In fact, they could be just the opposite when used correctly. Bad credit cards are just called that way because they are specifically targeted for people who have bad credit histories or a bad credit rating. As you might expect, they do not require much besides an application form.
You can easily acquire a poor credit card and many banks and financial institutions offer them. The only drawback with bad credit cards is that they have a higher APR than the usual credit cards. That means you will have to make prompt and regular payments for your credit cards. But besides saving yourself from the interest, there is another important reason for you to make prompt payments, as you will see later on in this article.
Being Bad to Be Good
Because they have few requirements, bad credit credit cards are the easiest (and perhaps the only) available option for you. And getting one could hold the key to a better credit score.
Get yourself a bad credit card and then do some light spending on it. Pay a couple of utility bills, buy yourself an inexpensive outfit, just do anything to use up a little of the credit extended to you. Then when the bills come, pay them as quickly as possible; don not let the deadline dawn without your having paid your dues. Repeat this process every month. What this does is it establishes you as a debtor who pays promptly. Your credit card company will notice the pattern and, pretty soon, so will other creditors.
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Bad Credit Credit Cards - Companies Jump On The BandWagon
Sometimes it can be very challenging to find a bad credit card company willing to take a chance on someone with no credit or bad credit. Though the offers may come in the mail, the eventual outcome for those with bad credit history will be a denial of credit. This can affect their future business and personal transactions for everything from renting cars to buying a home.
There are several companies that provide lists of cards that are specifically geared towards folks with less than perfect credit records. All of the cards have annual fees and fairly hefty Regular APR percentages compared to cards geared towards people with better histories. However, it allows the consumer with bad credit to begin the process of rebuilding a better record, which is worth the higher fees.
Many companies are jumping on the band-wagon, sort to speak, to help the consumer build a good credit record. Once a consumer shows that they can handle making consistent payments for six months or more, the company sends reports to the major Credit Bureaus. Setup fees, for this type of card, normally ranges from $19.99-$29.00 and an annual fee of approximately $48, the Regular APR is normally 9.9%, which is low for this type of card.
There are poor credit card companies that now offer no up front fees and other benefits such as Purchase Protection. They self promote as being a great bad credit card to use in order to strengthen your credit. They also offer periodic credit card limit increases, based on timely payments. There is an annual fees are in the price range of $39-$59 and a Regular APR of 14.9%.
How To Find Bad Credit Credit Cards
For a person struggling with their credit, it may seem like there are no decent bad credit credit cards. There are bad credit cards, but they are not always advertised as such. Many times a person just needs to recognize how certain cards work and why having bad credit might not effect their ability to get them.
One of the best poor credit cards is a prepaid credit card. A prepaid credit card works like a credit card, but requires a savings account be opened that acts as the account balance. In reality a prepaid credit card works much like a bank issued debit card with a credit card logo.
A person cannot overspend and they are not subject to fees or interest charges. Other types of cards that could be considered a bad credit card is a retail store card. These cards are fairly easy to get and are usually recommended for those looking to establish their credit history.
These cards can only be used at the specific retail store that issued them. They usually carry a low credit line balance. These companies are just more willing to give a person a chance then larger credit card companies. Another type of card that is good for a person with bad credit is a gasoline card. These cards work only at gas stations, much like a retail credit card. These cards are fairly easy to get and report to the major credit bureaus which means they build a persons credit so they can qualify for a credit card from one of the major credit card companies.
Bad Credit Cards: 7 Things You Need To Know
When you're looking for bad credit credit cards, weeding the bad credit cards from the good ones can be like searching for a needle in a haystack. With so many predatory lenders getting into the bad credit card arena, it's essential that you follow these seven rules if you want to avoid getting taken by the bad credit cards out there.
1. Never Pay Up Front
The first thing you need to understand when dealing with bad credit credit cards, and poor credit cards in general, is that no legitimate credit card offer is going to require you to pay money up front. If a credit card company won't process your application without you sending in an up-front fee, it's a scam. There's no ifs, ands, or buts about it.
2. You May Have to Pay For it
Now, just because you're not going to pay up front for credit cards for people with bad credit doesn't mean you aren't going to pay at all. When credit card companies require an annual fee, it doesn't mean that it's not a legitimate credit card offer.
The difference between the credit cards for bad credit and the good credit cards is that the good credit cards will charge your annual fee to the credit card they are issuing -- they won't ask for you to pay the fee up front.
3. Interest Is Going To Hurt -- But It Doesn't Have To Kill You
When dealing with credit cards for bad credit, you are going to have to pay a higher interest rate than people with good credit. That doesn't, however, mean that you should pay through the nose.
If you're being charged more than 20 percent interest, you're dealing with bad credit cards. Even with bad credit, you should be able to keep your interest rate below 20 percent.
4. You Might Need to Secure It
If you're credit isn't good enough to qualify you for an unsecured bad credit card, you might have to settle for a secured credit card. This means that you may have to give a security deposit that will be used to ensure your credit limit.
If you deposit $200, your credit limit should be $200. However, some of the poor credit cards will ask you to deposit more than the credit line they are issuing you.
If this is the case, go elsewhere for your credit card needs.
5. Secured vs. Prepaid
Now that we've covered secured credit cards for people with bad credit, it's important that you understand that secured credit cards for bad credit are very different from prepaid credit cards.
While prepaid credit cards do serve a purpose, they are bad credit cards if you're trying to rebuild your credit, since they don't report anything to the credit bureuas.
Make sure when applying for a best secured credit card that the credit card company will report your payments to the credit reporting agencies.
6. Adding it Up
When applying for credit cards for bad credit people, make sure the fees and credit limit offered make sense in relation to one another.
There are some very bad credit cards on the market that charge exhorbinant fees and issue very small lines of credit.
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