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 bad 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 bad credit credit cards 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 bad credit cards 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 bad credit credit cards, 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 enough to qualify you for an unsecured credit card, you might have to settle for a secured one. 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 bad 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, it's important that you understand that secured credit cards 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 secured credit card that the credit card company will report your payments to the credit reporting agencies.

6. Adding it Up

When applying for bad credit credit cards, 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.

For example, they company may charge a $79 annual fee and a $85 processing fee, but only issue you a $200 line of credit. This means that you only have a credit line of $36 available when the card arrives, and a debt of more than $160.

7. Watch Those Grace Periods

When dealing with bad credit credit cards, you absolutely must watch those grace periods and pay close attention to when your payment is due.

Some bad credit cards will have almost no grace period at all, and by the time you receive the bill, the payment is already due -- leaving you no time to send your payment in.

This is bad for you and good for the credit card company.

Why?

Because these bad credit cards can then tack on late fees and can increase your interest rate due to the "late" payment that you had no control over.

So, follow these seven fundamentals to help avoiding getting stuck with bad credit cards -- regardless of your credit rating.