Credit Cards For Poor Credit

It is a fact of life in today’s economy you must have a Visa or MasterCard – otherwise you can’t rent a car, make purchases online, rent a hotel room … And if you have a poor credit score then you are probably wondering what cards can I qualify and is it going to help me fix my credit?

Surprisingly, there are a lot of options. Not quite as many prior to our credit crisis and the new legislation on sub prime lending but you do still have choices.

Unsecured

Yes, you may still be able to qualify for an unsecured card. By unsecured we mean like a traditional credit card where you are given a card with a limit and must make monthly payments. However the new regulations in sub prime lending have almost completely wiped out unsecured bad credit cards.

The only ones we have seen available require you to have a checking account. Additionally you must make a $95 upfront security deposit, you are also charged a $75 annual fee, and a $10 monthly fee. On top of that you must pay an outrageous 36% interest rate.

We are really unsure how this offer is legal given all our recent lawmakers efforts to ensure customers are not being charged outrageous interest rates. However we wouldn’t be shocked to learn it is completely legal because this is some of the most profitable lending for banks and they are going to hire attorneys to find their ways around whatever laws are passed. This type of card will help your credit the most!

Secured

These will operate just like a regular card. However you must first secure your account by making a deposit with the bank. This deposit is refundable and will earn interest. The amount of your deposit will equal the amount of the credit limit. For example, if you deposit $300 your limit will be $300.

You will be charged an interest rate, however it will be low often around 10% because your account is secured. This will report monthly to the credit bureaus and is a great way to build some positive credit.

It will be reported as a secured credit line but will still help. Additionally your score will benefit if you can keep a balance of about 25% of your credit limit. For instance if your limit is a $1,000 by keeping a balance of about $250 you will show the bureaus you are using your credit but you are using it responsibly.

Prepaid

These cards are great for those without a bank account or in chexsystems. This is because many offer free direct deposit and a way to pay your bills online for free. Very similar to a checking account in the sense that you can go online and have a check sent to pay your: rent, cable, electricity, water, car loan ….

It is also helpful for staying within a budget because it is prepaid you can not spend what you have not deposited on your card. Before you can make purchases with it you must deposit funds. There are a number of ways to do this. This type of card will give you the purchasing power to: rent a car, book airfare, pay for gas at the pump … You can also use it for online and phone purchases.

These are your choices for a credit card with a poor credit history. While you do have options and by using your card responsibly you can build some positive credit it is critical to remove the negative items on your report. These are what are really killing your score. For a free credit consultation call 1-800-483-0256.