We all make mistakes, including mistakes with money. Unfortunately, those money mistakes can haunt you. And, even if your money issues stem from events outside your control, you can pay the price in terms of your credit score. When you have bad credit, it’s hard to borrow in the future — and that applies to getting a credit card as well as other types of loans.
If you want to rebuild your credit, a credit card is one of the fastest ways to do it. There are credit card issuers that will approve you, even if you have bad credit. You just need to be aware of what to expect when you decide on bad credit credit cards.
Secured Credit Cards
First of all, it’s important to note that many bad credit credit cards require some sort of security deposit. These are known as secured credit cards. People with bad credit deposit a certain amount of money, usually between $200 and $500, into a special bank account. This money is held as a security against default. If you don’t pay your credit card bill, the issuer can use the funds to reduce its losses.
It’s important to realize that the money in this account is just a back up; you are expected to make regular, on time payments. If you make your payments regularly, you will see your credit score start to improve, and you will eventually be able to move on to an unsecured credit card — and you might even see a higher credit limit.
Low-Limit Credit Cards
Another reality that people with bad credit have to accept is that, initially, the credit card will come with low credit limits. When you have made money mistakes, or if a financial setback has resulted in poor credit, you probably won’t qualify for a card like the American Express Blue Cash. Instead, you will need to consider bad credit credit cards like secured cards or low-limit cards.
Even if you don’t have to get a secured card, any unsecured card that you get (like the Unsecured Credit One Bank Visa Credit Card) is going to have a low limit. Many of these low-limit cards start at $300 to $500. However, as you show improved credit habits, making payments on time and in full, you will be able to request credit limit increases. Over time, you will improve your credit situation to the point where you can qualify for the more desirable credit card offers.
You will also need to be prepared to pay higher interest charges. The risk represented by people with bad credit means that issuers are likely to charge between 22.99% and 29.99% for unsecured low-limit cards. If you want a lower rate, you will have to choose a secured credit card.
Boost Your Credit
The main reason to look into bad credit credit cards is so that you can boost your credit score. Credit cards remain the fastest way to build good credit — as long as you are careful to make your payments on time. Try to spend only what you already have money for. Pay of the balance each month so that you don’t have to pay interest charges. If you are careful moving forward, one of these bad credit options can help you get back on your feet.