Bad credit cards are aimed at people who have made mistakes in the past. In today's tough financial environment getting one can be tricky, but the approval requirements for the cards listed below are less stringent.There are three different types available a secured, unsecured, or pre-paid.
With an unsecured offer they will usually provide you with a limit of several hundred dollars. As this type represents a high risk to the lender, you will usually have to pay higher annual fees. These fees typically range from a few dollars year, up to and over $ 99 every year. The APR is also higher and will usually be above 19.9% APR.
With a secured card they will require you to make an initial deposit, which is then held as a bond. These work the same as unsecured in that you will have monthly bills, an interest rate and a limit. The amount that you deposited as your bond becomes your limit. The bond will earn interest for you whilst it is held, and be returnable if you close the account on good terms.
A key thing to look for with these types is whether or not the company reports to the main credit bureaus. There are three main bureaus, and if you are managing your finances well and are paying your new bills on time, you want them to know about it, as this can help to improve your rating. Bear in mind, however, that you may already be able to remove negative entries on your report, by contacting the bureau directly.
Pre-paid cards are used in a similar way to that of a bank card. You can fund your account through direct deposit, use it to pay bills, make online payments and withdraw cash. Some companies charge you for every transaction or withdrawal, so make sure you check the terms and conditions.
There are several companies in each type of offer that are prepared to approve people, even those with bad credit. However make sure you are aware of the fees and interest rates that you will will liable for if you sign up, and read the terms and conditions carefully. Due to the high fees and interest rates involved, you should only consider these options if you have exhausted all others.
In sum, these can be helpful to get you through your day to day. But it is important to realize that you don't just have to live with these high costs. There are steps you can take to improve a damaged score, while in the meantime you do use a bad credit card.