Credit cards for bad credit might sound like a ridiculous phrase, but they are anything but funny to those who have to have them.
For a variety of good reasons, people need credit cards. But for people who do not have good credit, obtaining credit cards can be a tricky proposition.
There are plenty of companies and banks that are willing to give you a credit card even if you have poor credit, but the terms can make even a desperate person blanche. Fortunately, there are a few lenders that offer credit cards to people with bad credit on reasonable terms.
Things to Watch Out For
Here are some items of fine print that you will need to keep an eye on before signing up for a credit card:
Choose between high fees and high interest rates, but don’t choose both!
Credit cards for bad credit can come loaded with extra fees that other credit cards don’t have. Find out what all of them are and calculate if they will be a good trade-off for a low interest rate. Look especially for the phrase “recurring fees” and find out how much they are. Take note of processing fees that can be charged even before you get the card in hand.
Look for cards that allow you to pay your security deposit in installments
If you go with a card that has secured credit, you will need to pay a security deposit. It can be a lot easier to pay that deposit of up to $200 if you don’t have to do it all in one pop. With some cards, your credit score will determine the amount of that deposit, so your total could be much lower. Look for cards that allow you 1-3 months to pay your security deposit. Once you close your account, as you get back onto your feet and opt for lower-interest cards, you will get your deposit back.
Stay away from credit cards that do not require a credit check
Such news of no credit check might sound good to you, but you will regret signing up for any such credit cards while having a low credit score. Many of these cards eat up most of your meager credit line with fees in the first year; others do nothing to actually help you build your credit rating.
Try for a card at your local credit union, bad credit won’t cost you extra
Federal credit unions are not allowed to charge interest rates higher than 18%, so a trip to your local not-for-profit credit union might be a good idea. These establishments often have lower APRs and fees, and some waive late fees, too.
If you have bad credit yet need a credit card, you should view any such arrangement as extremely temporary. You can lift your credit score quickly through on-time payments and managed credit lines, so your days of paying high interest plus fees should be few.