Credit Cards For Bad Credit – A Good Way To Raise Your Score, Or A Slippery Slope
Yes it's true that financial institutionsand lenders have tightened their belts a bit in the past few years since the economy hasgone south.
It may seem as though it is harder to obtain credit than in the past, but restassured, it is still very possible to obtain credit cards for bad credit if you have gonethrough a rough spell.
If you have not been able to get a credit card by going the traditionalroute, you still have 3 options you can try to procure a card.
The first type of cardis known as a sub prime credit card.
Designed with people with bad credit in mind, theyare marketed as such.
Many people that have gone through bankruptcy are surprised by thenumber of offers from these companies they get very soon after their discharge.
And theseoffers appear to be very good.
But they must be looked at very carefully.
Generally, theyreally are not a good deal at all.
They more than likely have a very low credit limit,astronomical interest rates, and the holder must pay an annual fee.
Thankfully, thereare now regulations on credit cards put in place by the federal government.
The cardissuers now simply get the money upfront in the form of startup fees.
Can you imaginebeing stuck with say a $125 fee upfront? That's an instant debit of $125, for nothing.
Thisis why these cards are good to stay away from.
The next types of credit cards for bad creditare prepaid credit cards.
They have made a huge showing in stores everywhere.
These cardscan be found online as well as at places like Wal-Mart.
Looking exactly like a normal creditcard, and used exactly like regular cards, these prepaid cards have the same master card,and visa logos.
The big difference is in the way these cards operate.
Here you are notgiven a line of credit to use, you must prepay the balance, and then as you use the card,the balance goes down to a point where you must reload it.
Sounds good right? Actuallythey are good in the fact that you cannot get deeper into debt, but there is servicefees associated with these cards.
Anyone interested in this type of card must be aware of this.
And typically, if the card is stolen, you will not be protected against unauthorizedcharges.
The next type of card to be covered is the secured credit cards.
Similar to the previous type of card, youhave to set up a prepaid situation, but in this case you set up a savings account, whichis insurance in case you don't pay.
Depending on the balance you have in the savings account,your credit limit will be set to that amount.
Nice perk of a secured card is that you cangain a little interest on the savings account portion.
These cards are great in that yourcredit score reflects your activity with the card.
Make sure you make timely payments!And, after a year or so of good activity, you may have the ability to convert the cardto a traditional type.
So yes, there are a number of credit cards for bad credit optionsavailable.
No matter which you choose, make sure to research it fully before you commit.