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.
Whether your credit rating is bad, you do not have to consider yourself an unhappy person, as it can happen to anyone. The good news is that there are available bad credit credit cards which can help you change your situation for better. In addition you have now the possibility to educate your future spending habits in order not to be tempted to spend more than it is necessary.
The people who have many financial debts can consider these credit cards their rescuers in a difficult moment of their lives. They are called as well secured credit cards. A secured credit card supplier will require from you to open an account in which cash balance must be kept.
If you want to know why these card suppliers need cash balance in your account, we can tell you that it can help their business run. In addition they need money from you in order to pay the interest corresponding to your account. Moreover, they must be sure that they get payment from you as long as you are not known as a very reliable person from this point of view so they need sort of safety measures.
If credit cards for bad credit did not exist, profits would be threatened. You have to consider that a credit card provider or a bank in general will cover the interest corresponding to your account balance. Nevertheless it is a good thing to verify it with the bank or the credit card provider before getting one.
You are not allowed of course to spend as much as your shopaholic instinct tells you as there will be set a limit according to your cash balance in your account as soon as you get this card. These debit cards, as they are also called may operate as providers for credit.
Secured credit cards are available in the market for people with bad credit rating. You just have to look for the best bad credit card cards whose features are best suited to you. There are credit card suppliers who will give you plastic money but will require you to maintain a minimum balance in your bank account. There are also companies who will set a credit limit for you.
You should look into the features each credit card supplier will give, like how much you are allowed to spend on your bad credit credit cards, the interest rate you will receive for your balance and how much you are going to pay for fees and charges. These are important points for you to consider so you will know which card supplier you will go to and help you stand up from a bad credit rating in the past.
As far as the cash balance is concerned you have to know that the greatest credit cards for bad credit are those which require a small sum of money or they do not require money at all, neither fees, nor charges. The one who invented them had a good idea because they can help people who face bad credit and give them a chance to change their spending habits.
Both Max Anderson & David Smythe are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Max Anderson has sinced written about articles on various topics from Credit Card Offers, Credit Cards and Business Credit Cards. For more tips on getting the , saving money and avoiding getting taken, check out CreditCardTipsEtc.com, a webs. Max Anderson's top article generates over 49500 views. to your Favourites.
David Smythe has sinced written about articles on various topics from Computers and The Internet, Russian Wife and Alternative Medicine. Looking for solutions? Stuck in credit card debt and not sure how to fix your credit card debt problem? Credit Card Conso. David Smythe's top article generates over 27100 views. to your Favourites.