Poor Credit Credit Cards: The Pros and Cons
Poor Credit Credit Cards
Poor credit credit cards are nothing to be ashamed of having. Many Americans these days find themselves in the same predicament of having bad credit and needing poor credit credit cards. What you are really looking for are secured credit cards. Many banks and credit institutions offer easy to acquire cards that are specifically designed to help rebuild your credit. However you must be aware of the certain pros and cons of such cards.
Let us look at one of the poor credit credit cards known as a secured credit card. This a type of card that is issued only after you have deposited some cash as collateral with the company.
Your credit limit on such a card is equal to the amount of cash you have deposited into your account at that institution. That way you can only charge on the card as much as you have cash for in the account. I know that this sounds like it is not a credit card but it is. The only difference is that you are putting up the money first before you use the card. That way the credit card company is safe if you decide to default on your loan.
Disadvantages of Poor Credit Credit Cards
So what are the disadvantages of such a card? The first and perhaps the biggest real disadvantage is that if you are late with your monthly payment you will be hit with a late fee and interest just like you would with an unsecured card. As your late fees and interest build up, the balance in your account will dwindle. Even though you put the money in there this penalty will still happen. And these late payments will be reported to the credit bureau and will further damage your credit. You can’t treat this card like a debit card because that is not what it is.
You must remember that your secured credit card is a trial run if, you will, to having an unsecured card. How good you perform with this poor credit credit card will determine how quickly you can be trusted with a real credit card.
The fees and interest for late or slow payments is the biggest disadvantage of owning poor credit credit cards. You will be able to put up with that if you are determined to repair your credit. And that is what we are talking about here right? Your search for poor credit credit cards is just a means to an end. Repairing your credit can only begin here. Now let’s look at some advantages of the secured credit card.
- The first advantage is a big one. By obtaining a secured credit card and using it responsibly and making payments on time you have begun the journey to good credit and financial freedom.
- The next advantage of these cards is that the deposit you make will be the credit boundary and so it can be as high as you want. When you apply for an unsecured card the company determines the credit limits you can have.
- Your balance acts as a savings account as long as you update your account. So really this card is giving you just what you need at this time in your life. A savings account.
- Also if you have an excellent payment history it will prompt the institution to increase the credit limit ahead of the deposit and eventually even give the deposit back to you after a specific time period.
How to Use Poor Credit Credit Cards
There are some rules to follow if want to do the correct things involving secured credit cards. These are not really hard and fast rules, just some good advice to follow. Before signing up for a secured credit card, do your research. Read all the “fine print” and make sure that this card is right for you. There is no worse thing that could happen than to get into a contract with a dishonest credit card company. Make sure that your secure card giver reports to three major credit bureaus every month. If you go to all the trouble of trying to rebuild your credit you need to make sure that your efforts are noticed by the right people.
Find out just how your account will be reported to the bureaus. If the company is going to report your account as “secured” then you would be better off looking for another company that will not report it in this manner. Once you get your card you need to use it responsibly and make sure and make your payments to make your payments on time. Try and not be late even one day. We want to make sure that their reports about your account are pristine.
Try to pay off the balance each month. This serves a twofold benefit. First of all if you do this you will be more than likely be paying much more than the minimum payment and you will have a positive impact on your credit score. Remember you are using poor credit credit cards as a vehicle to repair your credit rating. That is the only reason why you are doing this. Keeping that in mind will help out immensely. Poor credit is not a forever thing. It can be overcome and you can be the conqueror. Just make good use of the secured credit card. This type of card will aid you in rebuilding your good name while at the same time eliminating the risk to the lending institution. This will also reestablish your financial credibility. Your first step is to get started with poor credit credit cards.
Poor Credit Credit Cards-The Way to Clear Up Your Poor Credit
Poor Credit Credit Cards
If you have somehow gotten yourself into a bad credit situation there are no short term remedies. You can however reverse the journey by getting yourself some poor credit credit cards. This may seem harsh at first because nobody wants to pursue these types of cards but they will aid you in reestablishing your credit.
Now poor credit credit cards are usually secured credit cards. Just what is a secured card? A secured credit card is one that requires you to pre-load it with funds and the amount you load it with is the amount of money that you are allowed to spend with that card. So how will this help you get on the right track to bolstering your credit? Well many secured credit card institutions will report to the credit agencies. This will greatly aid you in establishing your credit and in pushing up your credit score.
Now when a credit institution researches you and finds that you have not paid your bills or have not paid them on time or you haven’t kept a job for any substantial length of time or you have moved around quite a bit, they will deem you a high risk and will probably deny you any credit card unless it is prepaid.
The thing about getting a secured credit card is that you are not worrying about their approval since you are funding the card yourself. You are usually allowed to load as little as $200 to as much as $1000. This makes it incredibly easy to begin rebuilding your credit rather quickly.
Cons for Poor Credit Credit Cards
Now there are some cons to having poor credit credit cards. The only real drawback to having a secured credit card is a high application fee and a high annual fee that accompanies it. Be sure to read the fine print when applying for these cards. One other thing that is bad is that they may charge you a high processing fee also. You may want to stay away from cards with the highest fees because they will eat up the deposits that you make. Although this seems to be unfair it is the price you pay for making the mistakes you made to get into this situation. There is always a price to pay.
Are There Other Types of Poor Credit Credit Cards I Can Get?
The question that is always asked is if there are any other types of credit cards one can get that will help rebuild one’s credit? The answer is yes. There are secured credit cards that you may apply for. A word of caution here however. Secured credit cards are harder to find for people with bad credit and as a rule carry high interest rates.
Having bad credit requires that you do the diligence and research the companies that you wish to apply to. You should contact several credit institutions who offer unsecured credit cards. By contacting them I mean you should call them and talk to them about the situation you are in and asked them just what deals they can offer. Now when you first call you will be put on hold once or more as they bounce you around to the right department. Just be patient and nice and put up with what they are dishing out. Remember they don’t need you. You are nothing to them right now. Just play along until they begin to deal with you.
If they require a credit check, which most will, make sure that they perform it within a two week period. By doing it this quick it will have less of an impact upon your credit score.
Remember I said that you should contact several companies about an unsecured card? The reason for this is to compare a few items from each company. These are the items to compare:
- The interest rate they are going to charge.
- The credit line or limit they offer.
- Any and all fees due to late or missed payments.
- Their policy involving interest rate after missed or late payments.
So which institutions will you chose? Choose the one company who offers the best combination of all four criteria above. The choice will not necessarily be easy but you will have to make one according to your situation.
Poor Credit Credit Cards Guidelines
There are ways to use your poor credit credit cards the right way and the wrong way. Whether you are using an unsecured or secured card you should follow these guidelines.
You should buy responsibly and use the card for just the things that you need. Don’t run out and charge up your limit on foolish things. Buy only things that you are going to pay off completely at the end of the month. Always pay more than the minimum requirement and get your balance below the 50 percent level for each card. Try and keep a working relationship with the credit card company. If you do this you will feel better about yourself and you will be taking positive steps to rebuilding your credit.
I have some more words of caution for you. Don’t let yourself slip back into old habits. Stay on course and do what is right. It is so easy to slide back down the hill to bad credit. Remember that you have started on a road to recovery and that road is an uphill climb. Don’t give in to temptation to undo all that you have done to steady the boat so to speak. Stay the course. You will be so glad that you did all these things when you see your credit score on the rise.
So whether you get a secured credit card or an unsecured credit card take care of it like it was gold. I hope this has helped you on your quest to find poor credit credit cards.
—->Learn More About Poor Credit Credit Cards<—-
