Credit Cards for People with Bad Credit – How to choose what is Just Right for me?

How to Choose What is Just Right for You

When applying for credit cards, you should make sure they offer low fees, low APR (below 10%) and, most importantly, that they report your payments to the credit bureaus such as Equifax, Experian and Trans Union. If they report to the credit bureau, it is a good way to rebuild your credit so that in the future you can get regular credit cards with no application processing or annual fees.

What Kinds of Credit Cards are Available to People with Bad Credit?

There are a variety of credit cards to choose from for people with bad credit. You will definitely need to shop around and find the best possible deals. Due to poor credit, chances are you will not be able to get a regular, no annual fee credit card from regular credit card companies. However, there are many credit card lenders who specialize in people with bad credit and will issue credit cards but most, if not all, of those cards come with a fee that you should be aware of. Some are:

Annual Fee: A fee you pay annually, for the privilege of using the card.

One time Application/Processing Fee: A fee charged for application process, which can be as high as $100.

Monthly Fee: Many credit cards have a monthly processing fee, which can range $5-10.

Excessive Fee Due to Having Bad Credit

You may end up paying quite a bit in fees just to have the privilege of using a credit card but this is the price you have to pay when your credit is less than perfect. Having a credit card can be a lifesaver and comes in handy if you need to make a plane or hotel reservation or rent a car. It is also a way to rebuild your credit score if used responsibly. Once you have made your credit card payments on time and stay within your credit limit, you can then begin to establish new credit and get a regular no annual fee credit card.

Secured Credit Cards/Prepaid Credit Cards

A secured credit card or prepaid credit cards require a cash deposit. The cash deposit will be your available credit limit. For instance, if you make a deposit to your account in the amount of $200, that is your credit limit and you can only charge up to $200 on your account. You are also able to add more money to your account if you need a larger credit limit. Secured/Prepaid credit cards on the other hand, are an excellent choice because it prevents you from getting into more credit card debts. However, it will not help you to rebuild your credit history.

Unsecured Credit Cards

Unsecured credit cards do not have a security deposit linked to it. The higher your credit score, the higher your credit limit will be. Being able to get an unsecured credit card in the future should be your goal. All you need to do is keep a clean credit history from now on.