Where Can I Apply for Credit Cards With Bad Credit?
One of the worst effects of bad credit is not being able to get loans or open new credit card accounts. This can severely curtail your buying power. Fortunately, credit card options exist for people with bad credit. These cards can help you make purchases conveniently and help you re-establish a good credit rating. You should know these options and weigh them before you choose the best one for you.
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Your Financial Institution
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If you have a checking or savings account at a bank or credit union, it may give you a credit card even if you have bad credit. If you have established a long history as a good customer, it may loosen their usual requirements. However, it may charge you a higher interest rate or impose other terms to offset its risk, such as a high annual fee or monthly maintenance fees. This type of card will help rebuild your credit as long as you maintain an on-time payment history.
Secured Card Issuers
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If you have bad credit, you can still apply for a card if you are able to save up at least $300 to $500 and choose an issuer that offers secured cards. Your money will be used as security for the credit card. You will be required to deposit it into an account, and the card issuer will give you a credit limit equal to that deposit, This type of card helps you to repair bad credit because your payment history is reported to the major credit bureaus.
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Pre-Paid Card Issuers
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If you have bad credit and mainly want the convenience of using a credit card instead of cash, you can apply for a pre-paid credit card. Your bad credit history won't prevent you from getting one because you can only spend money that you deposit onto the card. Once you use up your deposit, you cannot use the card again until you charge it up with more money. This type of card does not help you repair bad credit because you are not borrowing money and making payments on the account. Therefore, there is nothing to report to the credit bureau.
Debit Cards
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Even though debit cards are not true credit cards, many have the Visa or Mastercard logo and can be used at all merchants who accept credit cards. If you mainly need a credit card for convenience, you can apply for a Visa or Mastercard branded debit card linked to your current bank account. A debit card won't help repair bad credit because you are spending your own money that is being taken directly from your account.
Traditional Credit Cards
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You can apply for traditional credit cards even if you have bad credit. Some issuers will give you a card, although they will most likely charge you a high annual fee and interest rate to help offset your risk. They may also impose monthly maintenance fees and high charges for things like late payments or going over your credit limit. According to Lucy Lazarony of Bankrate, your credit limit will most likely be small. However, if you pay on time for at least a year, you can ask for a credit limit increase and request that you interest rate be lowered and that your annual fee be waived.
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References
- Photo Credit Lotus Head: Wikimedia Commons
