Credit Card Offers For People With Bad Credit Or Poor Credit History
Published 11/20/08 (Modified 4/24/13)
Updated List Of The Best Secured and Unsecured Bad Credit Cards For Credit Improvement
Credit card usage is a fact of life whether you agree with its pervasiveness and all around commercial necessity or not. What started out as a way for consumers to make payments quickly and efficiently without the need to carry around cash bills and coins has morphed into a mish mash variety of credit card rewards, airline credit card miles, and balance transfer offers. Today, credit cards are used and needed for everything from airline ticket and hotel room reservations to car rental bookings. Credit card numbers are also necessary for frequent online shoppers as traditional bank accounts and debit cards don't offer the same high degree of fraud protection that credit card issuers do. Owning at least one credit card and paying back the balance on a regular basis is also one of the easiest and most established ways to build up a credit score history, and secure your future ability to get approved for home mortgages and car loans.
Even those who are generally opposed to the use of credit cards and revolving debt on principle may find it difficult at times to survive without one. During tough economic times, independent minded people such as myself have used credit cards as emergency fund money to weather momentary periods of unemployment instead of relying on family handouts or resorting to desperate measures like high interest payday loans.
Of course, tapping into the myriad of credit card programs available in the marketplace requires that you be credit worthy and reliable as a borrower, as reflected by your existing FICO credit score, the 3 digit numerical expression most commonly used by credit card issuers and loan officers to evaluate your ability to pay back debt based on past payment history. Those with high FICO credit scores naturally have the inside fast track to the best credit card offers featuring the lowest interest rates with most lucrative cash back reward tantalizers, but even those with poor credit scores or a damaged credit history still have viable options at their disposal. While credit card issuers are significantly more leery about lending credit to those with troubled pasts, it's not impossible for those with no credit history or those with bad credit to obtain a credit card, although it will probably cost you. Those with poor credit must recognize that the bad credit or subprime credit cards will almost certainly demand higher interest rates, annual fees, and account maintenance charges than regular consumer or business credit cards. However, the stiffer terms are necessary to compensate credit card issuers for the extra credit risk they must take on to lend money to applicants with less than perfect credit.
Secured and Prepaid Credit Cards Provide Credit Options To Those Denied For Regular No Fee, Low Interest, Unsecured Credit Cards
Those with out of control shopping obsessions, with damaged credit histories and no self control when it comes to credit card use, should stay away from applying for credit cards altogether, bad credit cards or otherwise. However, those with limited or no credit history, or those with a less than stellar past when it comes to debt, who wish to improve their credit scores may want to consider credit card programs set up to help cardholders rebuild, repair, and improve their credit for the better. Because people who have never used credit or those who need to repair a poor credit history may not qualify for regular card terms, applying for either a high interest unsecured credit card, a deposit-secured credit card, or even a prepaid credit card may be the only way to establish or re-establish credit. These so-called bad credit credit cards in all their variety provide cardholders the ability to maintain their access to the day to day consumerism benefits of credit card usage and take steps towards salvaging their financial lives and credit histories. By making regular monthly payments towards their secured or prepaid credit cards, their FICO credit scores are likely to see improvements, allowing them the opportunity in a few months time to possibly qualify for a regular consumer card with substantially more favorable terms.
Of course at the same time, it's important to bear in mind that if you fail to meet your bad credit credit card's monthly payment obligations, you will likely be hit with stiffer fees and interest payment demands resulting in further deterioration of your credit rating. But those with poor or damaged credit who are genuinely planning on walking the straight and narrow path to improving their credit status will benefit from the poor credit credit card programs listed below. Even in this current tough economic climate amidst the credit crisis, there are still ways to approach debt usage responsibly.
Unsecured credit cards for people with average or slightly bad credit in need of improvement (low fees, but require average credit):
If your credit is merely average or could use some improvement, then applying for an unsecured credit card designed for those with average credit may be your best option. These cards still provide a reasonable array of reward offers without the hassle of overly high annual fees or extraneous charges. The only downside is that compared to their excellent or good credit card comparable, the credit cards for those with average credit tend to have lower and more modest credit limits ($1,000-$3,000).
Unsecured credit cards for people with poor or bad credit (No deposit required, but need to pay attention to fees):
Those with a troubled credit history or those with a bad track record of timely credit card payments may have to resort to higher annual fee unsecured card options. Credit card issuers that cater to the bad credit or subprime market are willing to extend you credit, but will undoubtedly demand more restrictive terms and conditions in exchange for the higher risk. While some unsecured cards do not demand a potentially hefty upfront deposit, many do require higher maintenance charges. Of course, despite the higher fees, the very purpose of applying for bad credit credit cards is to help you improve your credit usage history so that one day you can upgrade to a more traditional card program in 12 months or so.
Secured credit cards for people with very bad or damaged credit (Security deposit needed):
While there is a growing trend away from secured cards and towards unsecured cards with lower credit limits and higher interest rates and fees, secured credit cards still remain a viable option for those with nowhere else to turn for credit. Unlike an unsecured card, a secured credit card requires an upfront cash collateral deposit that becomes the credit limit for your account (for example if you deposit $500, your credit limit is $500). While the deposit is held by the card issuer for security, the deposit generally earns interest and is refundable once the cardholder no longer wants to access the secured credit line. Of course, because all secured credit cards charge an annual fee, it's important to shop around and compare.