If your credit is not exactly stellar, you might think of getting a credit card for people with bad credit. Aside from having a usable card, you can actually benefit from it in bigger ways.
Improving your credit.
If you have bad credit but you’re keen on rebuilding it, a secured credit card can be a lot of help. It is a credit card that will be backed by a cash deposit – usually $200 to $500 – the amount of the credit limit. 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.
After getting your secured credit card, make sure you pay your bills on time and in full every month. Doing so will reflect well on your credit report, and lenders will see that you are a responsible cardholder.
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, after some time of being an unsecured card user and making full and on-time payments, you can be eligible to apply for a regular unsecured card. By then, lenders will have observed that your circumstances have changed for the better and you may now qualify for unsecured credit. Your secured card issuer may even offer you unsecured credit on your secured account, meaning you have greater 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. It will make you more careful about your spending and force you to make those monthly payments on time.
Options for Credit Cards for Bad Credit
When it comes to the best option for people who have bad credit, all fingers point to secured cards. 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. Lastly, you might want to look into store credit cards which are probably the easiest type of credit cards to get, but they usually have low credit limits and skyrocketing interest rates.