Benefits of Owning a Credit Card for Bad Credit
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.
Repairing your credit.
If your credit is in poor shape but you’re determined to fix it, you can do just that with a secured credit card. 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 this, your payments will show in your credit report, and lenders will be pleased to see this.
To gain the most from a secured credit card, find out whether the card company reports your payments to each one of the credit bureaus. You need to ensure that all your efforts in fixing your credit have been recorded.
Move up to a regular 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 secured card issuer may even offer you unsecured credit on your secured account, meaning you have greater spending power. But do check the interest rate moving forward as it tends to be high.
Lean to handle your money.
There’s surely a reason behind your bad credit, and poor money management skills could likely be a key factor. 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 learn to think twice about what you charge and make sure those payments are made on time and in full.
Options for Credit Cards for Bad Credit
When it comes to the best option for people who have bad credit, all fingers point to secured cards. With such cards, you pay a refundable (when you close or upgrade your account) security deposit, which basically protects your provider if you fail to pay.
You have other options, such as unsecured cards for bad credit, which you can have without a deposit but with rather 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.