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Credit Cards For Bad Credit - A Good Way To Raise Your Score, Or A Slippery Slope?

April 16, 2012 | Comments: 0 | Views: 126

Yes it's true that financial institutions and lenders have tightened their belts a bit in the past few years since the economy has gone south. It may seem as though it is harder to obtain credit than in the past, but rest assured, it is still very possible to obtain credit cards for bad credit if you have gone through a rough spell. If you have not been able to get a credit card by going the traditional route, you still have 3 options you can try to procure a card.

The first type of card is known as a sub prime credit card.

Designed with people with bad credit in mind, they are marketed as such. Many people that have gone through bankruptcy are surprised by the number of offers from these companies they get very soon after their discharge. And these offers appear to be very good. But they must be looked at very carefully. Generally, they really are not a good deal at all. They more than likely have a very low credit limit, astronomical interest rates, and the holder must pay an annual fee. Thankfully, there are now regulations on credit cards put in place by the federal government. The card issuers now simply get the money upfront in the form of startup fees. Can you imagine being stuck with say a $125 fee upfront? That's an instant debit of $125, for nothing. This is why these cards are good to stay away from.

The next types of credit cards for bad credit are prepaid credit cards.

They have made a huge showing in stores everywhere. These cards can be found online as well as at places like Wal-Mart. Looking exactly like a normal credit card, and used exactly like regular cards, these prepaid cards have the same master card, and visa logos. The big difference is in the way these cards operate. Here you are not given a line of credit to use, you must prepay the balance, and then as you use the card, the balance goes down to a point where you must reload it. Sounds good right? Actually they are good in the fact that you cannot get deeper into debt, but there is service fees associated with these cards. Anyone interested in this type of card must be aware of this. And typically, if the card is stolen, you will not be protected against unauthorized charges.

The next type of card to be covered is the secured credit cards.

Similar to the previous type of card, you have to set up a prepaid situation, but in this case you set up a savings account, which is insurance in case you don't pay. Depending on the balance you have in the savings account, your credit limit will be set to that amount. Nice perk of a secured card is that you can gain a little interest on the savings account portion. These cards are great in that your credit score reflects your activity with the card. Make sure you make timely payments! And, after a year or so of good activity, you may have the ability to convert the card to a traditional type.

So yes, there are a number of credit cards for bad credit options available. No matter which you choose, make sure to research it fully before you commit.

Are credit cards for bad credit a good idea, or just a way to get back into credit trouble? Discover various ways you can raise your score to stellar levels. Visit: Rebuild Credit Success today!

Source: EzineArticles
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