Which Credit Card Should You Get After Bankruptcy?
You may be able to get a credit card after bankruptcy, but it may not be the conventional credit card that the average consumer has. There may be different rules, regulations and requirements that you must comply with to be approved. The best thing to do is search out several sources to see which offers the best terms and agreements. The card you choose should help you reach your goals and objectives.
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Bad Credit Cards
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After you file a petition for bankruptcy protection, you will have to pay higher rates of interest and a significant amount of fees if you want a credit card. The terms and conditions will vary from bank to bank. Some of the fees could include an annual fee, which can range from $25 to well over $250. These credit cards are for those who have bad credit or have just completed a bankruptcy. There could be a one time application fee, a monthly maintenance fee, and a one time processing fee, just to name a few. Once approved your credit limit can be reduced, by the amount of the one time fees. You will owe money before you make a purchase.
Secured Card
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Another alternative is a secured credit card. The process calls for you to open a savings account. The credit card is secured against the balance in the saving account. With an account balance of $700 you can make purchases on the credit card in the amount of $700. If you are late with a payment the money is pulled from the checking account and applied to your credit card bill. Banks have different time frames regarding how late you are before the money is taken from your checking account. If you make payments on time, with this account for one year or more, you may be able to get an unsecured credit card with better terms.
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Credit Reporting Agency
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If you receive a secured credit or a "poor credit" credit card, make sure that they report to the credit reporting agencies. This helps to re-establish your credit after a bankruptcy. Some of the secured credit cards will indicate that the credit card is secured which sends an alert to creditors that you had financial difficulty in the past. If you can find a secured card which does not report in this manner, it will work to your advantage. Eventually your credit report will improve and reflect a more positive credit rating. Rebuilding your credit takes time.
Reaffirmation Agreement
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If you have a credit card when you file your petition for bankruptcy, you may be able to keep that credit card for future use. Some credit card companies will allow you to sign a reaffirmation agreement which re-establishes the debt and allows you to continue paying on the card. In a situation such as this you will be able to use the card for future purchases.
Time Frame
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In the past, if you filed a chapter 7 bankruptcy, you had to wait six years before you could file again, but now the wait is eight years. A lot of credit card companies will send you offers knowing that you cannot file again for a long time. This gives you an opportunity to sift through the offers and see which one helps you meet your needs.
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