Are you suffering for a poor credit score, but need a credit card? You have quite a few options and many offers will give you easy approval.
In recent years the bad credit credit card industry has experienced a complete makeover. Many credit cards for poor credit have been taken off the market. This was caused by the economic crisis and new lending legislation.
4 Types of Credit Cards For Poor Credit
1. Unsecured Credit Card
This is a traditional credit card where you apply and are then issued a major Visa or MasterCard. It will have a credit limit, interest rates, and you will be responsible for monthly payments. Unfortunately, unsecured credit cards for bad credit have completely disappeared from the marketplace.
2. Secured Credit Card
Secured credit cards have become much more popular. This is mostly due to the fact that unsecured credit cards are no longer available. With a secured credit card you will have a credit limit, pay interest rates, and you will have to make monthly payments. However, you will pay a low interest rate of about 10% APR!
Your account will be reported monthly to all three credit bureaus. This is one of the great credit cards for building credit. The big difference with a secured credit card is you have to first make a deposit with the bank. This deposit will secure you account.
In other words, it is insurance for the bank that they won’t get left empty handed. Your deposit is FDIC insured and fully refundable as long as you keep your account in good standing. You get to decide how much to deposit and your credit card will have a corresponding credit limit. For example, if you deposit $300 then your credit card will have a limit of $300.
3. Prepaid Debit Cards
Prepaid debit cards have become hugely popular over the past few years. They are issued a major Visa or MasterCard. It will be accepted online and over the phone. There is no credit check and you will be given free direct deposit.
You also get an online bill pay system. To use this all you have to do is log into your online account, fill in the necessary information and press send! Then a real check in your name will be sent to pay your bill. You can also can send a payment to an individual.
This is just like a checking account. It can save you a tremendous amount of money by avoiding check cashing fees and buying money orders! Best of all you will never pay:
- Late fees
- Interest fees
- Overdraft fees
- Bounced check fees
Many consumers prefer reloadable credit cards because you can not go into debt. Instead, you can only spend the money deposited on your prepaid debit card.
4. Shopping or Catalog Credit Cards
These are not real credit cards. They are not issued as a major Visa or MasterCard. They will offer you guaranteed approval and an initial credit limit of $500 and claim to report to the credit bureaus. However your credit card will only be accepted at an online retailer or for merchandise through a catalog.
In other words, this credit card will not be accepted anywhere else! It is like a department store credit card and will only be accepted for purchases at one location. Often, when you get these credit cards you are automatically enrolled in a monthly program that charges you about $30 a month.
You will pay a monthly maintenance fee. And to rub salt in the wound you are going to have to pay shipping on all your purchases. We can not understand this! How they have the audacity to charge you shipping fees when there is no retail location, it must be shipped.
Many folks get these credit cards in an attempt to build credit. Little do they know, this credit card will have a very minimal impact on your credit. This is because it is not a credit card for rebuilding credit like a Visa or MasterCard.
Best Credit Card For Poor Credit
We would encourage you to consider secured credit cards for bad credit or a prepaid debit card. It would be very smart to also work on removing bad credit on your credit report. This information is what is damaging your credit score.
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