How a Credit Card for Bad Credit Actually Helps
If you’re not exactly proud of your credit history, you might consider getting a credit card for individuals with bad credit. Besides being a working card at your disposal, it can actually offer long-term benefits.
Rebuilding your credit.
If you have damaged credit and you want to repair it, a secured credit card can be your best friend. It is a credit card secured with a $200 to $500 cash deposit, or an amount that is equivalent to the maximum credit allowed. This is typically used by people with bad or no credit history to demonstrate their creditworthiness to lenders or creditors before moving to or securing their first unsecured card.
After getting your secured credit card, make sure you pay your bills on time and in full every month. If you do, your credit report will show it and lenders will be impressed.
To make the most out of a secured credit card, see whether the card issuer reports all your payments to the credit bureaus. You need to be sure that your efforts to repair your credit are on record.
Upgrade to an unsecured card.
Yes, you can move up to a regular, unsecured card after a while of using a secured credit card and making consistent and full monthly payments. By then, creditors will have seen that your situation has improved and you may now be trusted again with unsecured credit. Your may even be rewarded with some unsecured credit on your secured card, boosting your spending power. But remember to check the interest rate while you move along as it could be unreasonably high.
Improve your money-handling skills.
There’s likely a reason behind your bad credit, and usually, it has something to do with poor money handling skills. A credit card for people with bad credit can teach you some!You could actually learn some from a credit card for people with bad credit. You’ll be more cautious when charging expenses and and more conscious about making on-time payments.
Options for Credit Cards for Bad Credit
So far, secured cards seem to be the best options for people with poor credit. For one of these cards, you need to pay a security deposit to protect the provider in case you default; if you decide to close the account or upgrade to an unsecured card, you will be refunded.
And then there are other options like unsecured cards for bad credit, which will not need a deposit but charge very high fees. Finally, you can consider store credit cards, which are easy to get but not without insanely high interest rates and low credit limits.