Do you have a low credit score but in need of a credit card? Majority of people find themselves in a quagmire especially when they have bad credit and in need of a credit card. Most financial companies are unwilling to approve unsecured credit cards that come with a range of benefits to people who have bad credit. However, the picture is not as gloomy as it looks as people with bad credit can get access to credit cards albeit with fewer benefits and a low credit limit.
For starters, it’s imperative to note that there are two kinds of bad credit credit cards. We have the secured credit cards and the unsecured credit cards. Secured credit cards for individuals who are deemed to have bad credit are designed in such a way that a person has to make a deposit before they are approved. This deposit is held in an account by the credit company and is simply a security measure in case the applicant defaults on the money spent on the card. It is usually returned to the card holder provided that their credit card account is in good standing.
Secured bad credit credit cards are generally for people whose credit score is very low and therefore experience problems applying for credit cards with great benefits and high limits. They are mostly designed to help people with bad credit enjoy some form of advanced credit while at the same time according them an opportunity to repair their credit report. The only downside is that various companies tend to charge exorbitant annual fees due to the credit status of the applicants.
Considering that these credit cards require some form of deposit, it’s advisable for an applicant to make a comparison of a number of cards offered by different companies to ensure that they get the best deal. One should not make a mistake of applying with the very first credit card company they interact with. By comparing the upfront down payment required and the annual fees imposed by various companies, a person could be able to narrow down to a card that is specific to their needs in terms of cost, limits to credit advanced and benefits.
Alternatively, there are bad credit credit cards that do not require any kind of deposit. These are the unsecured credit cards. In as much as they are appealing and have a relatively higher limit as compared to secured credit cards, they always come with higher fees especially as relates to people with bad credit. Chances are that you don’t have the money that is required to pay deposit for the secured card and therefore resort to unsecured bad credit credit cards. The same rule of engagement applies. You need to take your time and compare several credit card companies and settle on one that best suits your needs in terms of cost, limits and benefits.
Taking out a credit card for bad credit can be instrumental in helping you repair your credit report so long as you don’t exceed the limit and pay up on time.