If you have had bad credit in the past, it might seem hard to get a credit card that isn't more expensive than it's worth. If you have had bad credit in the past or not, it is important that you avoid sub-prime borrower cards. These cards are very expensive, and if this is your only option you should not get a credit card. If you want some advice on how to avoid sub-prime borrower cards then this guide can help you.

What is sub-prime lending?

Sub-prime lender is not a new type of lending, but it is growing in popularity. This type of lending is offered to people who have poor credit or who don't meet the requirements of other lenders. Although this might seem like a good thing, often the drawbacks and costs of such lending far outweigh the benefits.

What are the costs?

Although it might seem strange that a lender would want to take a risk giving a credit card to someone is a risk in terms of being able to pay the money back, they can actually make a lot of money from it. By offering poor credit consumers credit cards that they could not get anywhere else, but with massively high interest payments and fees, they can make money even if some people are unable to pay. You might get a ?500 credit limit, but ?200 of that could be fees and the interest could be 30% or more.

Who gets targeted?

Mostly people with poor credit ratings get targeted for such cards, although other groups of people can end up being offered these cards, such as the self-employed. If you are offered one of these cards you should definitely decline. Even if your credit is bad you should not have to pay such an amount for a card. If there are no other options open to you, then it is likely that having a credit card would be a bad idea for you anyway.

Alternatives

If you do want a card but have poor credit, then there are options open to you. If you shop around online you should be able to find a good deal that has reasonable rates and good levels of service. If you are unable to get a regular credit card but you need something to repair your credit history, then look at getting a secured card. These cards require you to secure the credit by putting up something as collateral. Although these cards don't offer you much in the way of spending power, they are a lot cheaper than sub-prime borrower cards.

Seek advice

If you are having problems finding a credit card that does not have extremely high fees and want some help, then consult an independent financial advisor for some advice. They will be able to tell you honestly what your options are, and which products to avoid. If you look around and avoid the extortionate sub-prime lenders, then you will end up with a much better credit card deal.