Your credit score can plummet quickly due to a poor budgeting strategy or by simply spending more money than you have. If your credit score has been reduced to a number that is less than stellar, it doesn’t mean that you won’t be able to qualify for a credit card. In fact, there are a variety of options that are available to individuals who have had bad credit in the past but who are trying to repair it by paying their bills on time. By having a better understanding of what credit cards for bad credit options are available, you can learn how these deals might help you to rebuild your credit.
Secured Credit Cards
A secured credit card is a type of program that requires collateral in order to be approved. You will be required to pay a security deposit of a pre-determined amount in order to secure the card, and this deposit should be of equal or of greater value than the amount of the credit. Collateral can be given in the form of stocks, vehicles, jewelry, or other items of value, and this collateral allows customers with either poor or no credit to receive a card to help with the rebuilding or initial establishment of their credit history.
It is important to note that credit cards for bad credit may help to rebuild your history through the use of low credit lines and certain fees. It is essential that you read through terms and conditions thoroughly and always pay your bill on time for this card in order to reap its benefits. If you utilize this card responsibly by paying your bill on time, you can eventually ask for an increase in your credit line or a reduction in your interest rate.
Top Secured Credit Cards for Bad Credit
The following secured cards are offered from well-known banks, and they are great options for individuals that have a bad credit history:
- U.S. Bank Secured Visa. This card places your security deposit into a savings account that earns interest. You will be charged an annual fee of $35.
- Wells Fargo Secured Visa. To be accepted for this card, you will need to have previously filed bankruptcy and have no liens that are unsettled. The limit of your credit will be established by your security deposit, and this amount can range from as little as $300 to as much as $10,000.
- Orchard Bank Classic Card. This card does not look at your credit score as long as your identity can be proven. The minimum security deposit is $200, but you will not be charged an annual fee for your first year, and after the first year the fee increases to only $35.
Prepaid Credit Cards
While these types of cards are not necessarily credit cards, they are accepted and used just like them. A prepaid card comes with the advantage that you won’t have any finance charges, and your card can help you to prevent damage to your credit because you will need to have paid for each purchase beforehand. You determine your credit limit because you will transfer as much money as you want into the card so that it is available for you to spend. This can help you to eliminate the risk of running up a major credit card debt. Additionally, the majority of prepaid credit cards don’t charge fees for financing, but other fees may be charged, such as application fees, monthly fees, over-limit fees, reload fees, and others.
When using a prepaid credit card, it is important to know how to protect yourself from credit card fraud. Identity thieves have found numerous ways to use stolen identities along with social engineering so that they can exploit prepaid card issuers and the customers they serve. This credit card fraud might occur during online account activation or when card holders are managing and accessing their online account. To prevent yourself from being victimized by this credit card fraud, be sure to log out of your accounts when using shared computers or media, and shred all of your important documents that contain sensitive information.
Appropriately utilizing a credit card can help to build or re-establish your credit history. It is important to pay off your remaining balance each month in order to establish yourself as a responsible borrower to the lender. If your poor credit history is preventing you from getting a traditional credit card, consider other options such as using a secured credit or a prepaid account. By taking advantage of these bad credit score credit cards, you can work to rebuild your credit score and history while taking advantage of all the other benefits that a credit card has to offer.