Bad Credit – Credit Cards Guide

The following article will help you understand the options when looking at bad credit – credit cards. Find out how these cards can help you get your credit rating back on track again so that you can beat your debt problems once and for all.

Bad credit – credit cards are designed for people who have a poor credit score but still can’t bear to be without a credit card. There are several different types of card in this category, and some are not really credit cards in the true sense of the term.

Types of bad credit – credit card

• Secured credit cards – A security deposit forms the basis of this type of bad credit – credit card. They require that the customer pays a deposit to the card provider to mitigate the chance of them defaulting on any repayments. The deposit required may be 100% of the credit limit, which effectively removes any chance that the provider will lose out because they are not actually providing any credit. This makes it more akin to a debit card, but with an annual fee and higher interest charges. No credit check is necessary for this card type.
• Pre-paid credit card – Visa, MasterCard and some other providers offer pre-paid credit cards, and these are also effectively debit cards. There may be ongoing monthly fees for these so-called bad credit – credit cards, and charges for loading your own cash onto them. That’s a high price to pay just to carry a piece of plastic with a credit card logo on it. These also do not require a credit check, thus they have no bearing on your credit history.
• Genuine bad credit – credit cards – These are genuine credit cards that have a much lower credit limit and usually a higher interest rate. This is the type of bad credit – credit card that you need if you want to repair your credit rating, although you are still unlikely to be approved for one if you are in the depths of your debt problem. These are for recovering debtaholics.

• Debit cards – One of the easiest ways to get in control of your credit card spending is to switch over to a debit card. This is a fantastic choice for those with bad credit as debit cards only involve spending your own money so you will better be able to stick to your budget. Another great thing about using debit cards is that they offer the exact same convenience that credit cards offer. Here is a quick summary of the benefits debit cards provide:
  • No interest charged for making purchases.
  • You are limited to using your own money so there is no risk of getting into debt.
  • Offer the same convenience as credit cards.

Bad credit – credit cards will be used by credit risks – that is, people who have had credit extended to them in the past but who have, for one reason or another, experienced difficulties paying it back to the extent that it has been reflected in their credit history. This may not have been a credit problem with credit cards, but could have been with utility companies, mobile phone companies, bank loans, car loans, mortgages, etc.

Credit problems make lenders understandably reticent about extending further credit to the customer, thus the low credit limit on genuine bad credit – credit cards provides reassurance that debt cannot build up too far again. Equally, the high interest rates on such cards provides an incentive for the customer to repay their balance in full every month, which is the surest way to rebuild their credit rating in the shortest possible time.

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