How a Credit Card for Bad Credit Actually Helps
If your credit is far from decent, you might want to want to apply for a credit card for people with poor credit. Aside from having a usable card, you can actually benefit from it in bigger ways.
Improving your credit.
If your credit is in poor shape but you’re determined to fix it, you can do just that with a secured credit card. It is a credit card secured with a $200 to $500 cash deposit, or an amount that is equivalent to the maximum credit allowed. This is often used by people with poor or no credit in order to prove their creditworthiness to lenders before upgrading to or applying for an unsecured card.
Once you have received your secured credit card, be sure to pay your bill in full and on time each month. If you do this, your payments will show in your credit report, and lenders will be pleased to see this.
To gain the most from a secured credit card, find out whether the card company reports your payments to each one of the credit bureaus. You have to make sure your efforts to rebuild your credit are recorded.
Upgrade to an unsecured card.
Yes, you will be able to upgrade to a typical, unsecured card after a certain period of using a secured credit card and paying down your debt on schedule. By then, lenders will have observed that your circumstances have changed for the better and you may now qualify for unsecured credit. Your may even be rewarded with some unsecured credit on your secured card, boosting your spending power. But do check the interest rate moving forward as it tends to be high.
Learn better money management.
There’s surely a reason behind your bad credit, and poor money management skills could likely be a key factor. A credit card for people with bad credit can teach you some!You could actually learn some from a credit card for people with bad credit. You’ll learn to think twice about what you charge and make sure those payments are made on time and in full.
Options for Credit Cards for Bad Credit
So far, secured cards seem to be the best options for people with poor credit. With said cards, you pay a security deposit – refundable upon closing or upgrading the account – as protection for your issuer in case you couldn’t pay.
You have other options, such as unsecured cards for bad credit, which you can have without a deposit but with rather high fees. Finally, you can consider store credit cards, which are easy to get but not without insanely high interest rates and low credit limits.