Unsecured Credit Cards for People With Poor Credit

Unsecured credit cards can help rebuild your credit if used responsibly
Unsecured credit cards can help rebuild your credit if used responsibly (Image: Burke/Triolo Productions/Brand X Pictures/Getty Images)

Once your credit falls apart, your options for opening a credit-card account are limited. You will need unsecured credit credit cards to rebuild your credit and make purchases that require a deposit. Even if you plan to pay cash, some purchases require a secure deposit with a credit card. This includes hotel reservations, car rentals and scheduling a flight. Without a credit card, your plans may not happen.

If you have poor credit or have never established credit, qualifying for a regular credit card is difficult. Secured or prepaid credits sound enticing, but to establish good credit you need an unsecured credit card. Unsecured credit cards are reported to the credit bureau and help establish your credit rating.

Specific creditors offer you options that allow you to get an unsecured credit card regardless of your credit history.

Unsecured Credit Card Fee Requirements

Read all of the fine lines when deciding whether to open an unsecured credit card. Understand all fees that apply. Fees are often required with unsecured credit cards for those with poor credit. Some may charge you an upfront application fee to open the card, which may be as high as $100. You may also be charged a one-time processing fee on top of the application fee. For the privilege of using the card, the creditor may charge you an annual fee which is added to your bill once a year. It may also charge a monthly processing fee of $5 to $15.

Unsecured credit cards may have many fees attached for those with poor credit
Unsecured credit cards may have many fees attached for those with poor credit (Image: Jupiterimages/Comstock/Getty Images)

Unsecured Credit Limit

When approved for an unsecured credit card, your credit limit will be low. The average limit is around $300, and you may not be eligible for an increase. These cards are provided for those with poor credit because they are considered high-risk for the bank.

One of the best things you can do for your credit is to keep your balance below 30 percent of your spending limit. This is known as your debt-to-credit ration. A low-spending limit will ensure that you keep this ratio low.

Borrowers who are high risk have lower credit limits
Borrowers who are high risk have lower credit limits (Image: Jupiterimages/Photos.com/Getty Images)

Reporting to the Credit Bureaus

Find an unsecured credit card that reports to all three major credit bureaus. This is by far one of the most important features to re-establish a high credit score. Ask the credit card company if it reports to Transunion, Equifax and Experian. If it does not, find a different credit card. The main reason for opening your unsecured card is to rebuild your credit history with these credit bureaus.

Unsecured Credit Interest Rate

Creditors assign interest rates based on your credit score. Having poor credit means your interest rate will be high. Often, creditors are reluctant to lower your interest rate even if you are in good standing over a period of time.

Though you may not lower your high-interest rate, it's important to pay your bill on time and stay below your spending limit. Creditors are always on the look out for these mistakes so they can boost your interest rate even higher.

To avoid excessive interest charges, always pay your bill off each month so you do not have an outstanding balance that rolls over.

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