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Recent
Articles on "Bad Credit"
Credit
Cards
Bad Credit and No Credit Credit Cards:
Avoid Hidden Fees & Rebuild Your Credit
Individuals with problematic
credit histories often suffer unfairly from high mortgage,
insurance, and car loan rates. On top of that, they have
difficulty getting approved for credit cards. The whole situation
can get extremely frustrating. Frequently, I get emails from
consumers wondering what they can do to rebuild their credit. The
first thing I tell them is to get a credit card designed for
people with bad credit. The second thing I tell them is written
in bold: READ THE FINE PRINT.
There are only a limited number
of credit cards for individuals with bad credit. At first glance,
many look the same. They all help build and rebuild your credit
by reporting to the major credit bureaus on a monthly basis. They
all provide you with the Visa or Mastercard you need to make many
purchases. And they are all necessary evils that can save you
thousands of dollars in mortgage and car loan rates in the future.
However, you must read the fine print before applying for one of
these credit cards, as they often charge high yearly fees, set-up
fees, and even monthly fees. Here, I will examine a few examples
of charges current “bad credit” credit cards bury in the fine
print. Of the three major cards I will examine, only one stands
out as consumer-friendly.
“Bad Credit” Credit Card #1:
This credit card charges a very low interest rate for an unsecured
credit card. However, your first fine print glimpse reveals that
there is a one time setup fee of $29. Not too bad. So far, since
the next charge is a one time fee of $95. So far, we’re up to $124
in expenses. That’s got to be it, right? No. Add in another $48
for the annual fee and $6 per month in account maintenance fees.
That’s brings the cost of your new credit card to $244 the first
year, and $120 each additional year. This is no small change, and
a card such as this should be considered only if you cannot be
accepted for a better unsecured credit card for bad credit.
“Bad Credit” Credit Card #2:
This credit card charges a very high interest rate for an
unsecured credit card. This can’t be good. But the setup fee is
only $29. Maybe this card isn’t so bad. There is that pesky
monthly maintenance fee of $6.50 per month which brings the cost
of this unsecured credit card to $107. Maybe we’ve found a
bargain. Not quite. The annual fee is a whopping $150. Yes,
$150 every year. That not only brings the initial cost up to
$257, but you will also pay $228 a year just to maintain the
credit card. There has to be a better offer.
“Bad Credit” Credit Card #3: This credit card is available as
both a secured and unsecured credit card, based on the issuer’s
review of your credit history. The interest rate is average, even
competitive. Now, the fine print reveals that there is a one time
setup fee. However, based on your credit, this fee can be as low
as $0 or as high as $49. So far so good, especially if your
credit is not that bad. But, there must be a huge annual fee.
Not exactly. The annual fee for a secured credit card is only
$35, and for an unsecured credit card, this fee can be as low as
$39 or up to $79. So far, the cost of this card ranges from $35
to $128. Now its time for the monthly maintance fee. This one
has to be huge. Or not. Its $0. That means the most you could
possible be charged to obtain this credit card is $128, about half
of what competing cards are charging.
Clearly, there are substantial
difference between “bad credit” credit cards. Of the three offers
we have examined, only one doesn’t take you to the cleaners. In
fact, “bad credit” credit card
#3 provides great value. All positive changes to your credit
history and credit score will translate into lower loan rates,
lower credit card interest rates, lower insurance rates, and
ultimately, thousands of dollars in savings. The path to
rebuilding credit has its costs, but in the long term, rebuilding
your credit with a “bad credit” credit card is the fastest and
most cost-efficient way to correct the often unfortunate
circumstances that have damaged your credit in the first place.
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