Should You Get A Bad Credit Credit Card

One out of every four Americans has bad credit history. Any payment that you may have missed on your credit cards, mortgage or any other loans in your lifetime would have been recorded in your credit history and you would be deemed as a risky business deal by anyone in the money-lending business.

In order to be eligible for a mortgage loan or a car loan which is required to live your daily life, a good financial history is almost necessary.

Should You Get A Bad Credit Credit Card

If you are one of the four Americans with a bad financial history, you do not have to despair. Bad credit credit card could just be your solution.

It may also be referred to as Guaranteed Approval credit cards. Companies issuing these types of cards are not stringent about the financial history of applicants. This is because bad credit credit cards are usually secured credit cards.

This means that the cardholder must deposit a sum of money as collateral with the bank issuing it to be approved for a card. The credit limit is equal to, a percentage lower or higher than the money deposited. If you run into any problems with making your payments, the credit card issuer will take the payment from your deposit.

Now that you have an idea of how bad credit credit card works, let us look into answering the million dollar question – should you get one?

One good thing about it, is that you can avoid getting yourself into deep debts with them. This is because having a credit limit close to the sum of money deposited ensures that you only spend what you can afford. Now, is that not a great piece of news?

Besides being debt-free with such card, you can also repair a defective credit history. All you need to do is to make prompt payments and never go over the credit limit on the card for at least a year. Take this opportunity seriously and establish your reliability.

Although, these reasons may tempt you to sign up for one as soon as possible, there are a few more issues we need to deal with. These type of financial cards come with higher Annual Percentage Rate (APR) and costs compared to general cards.

Hence ensure that you do the following:

Compare those in the market carefully. Choose one that offers you the lowest APR and costs. Read the terms and be aware of any hidden costs or unfavourable policies practised by the credit card issuer.
Read up on reviews about the bad credit credit card and the issuing company that you are interested in.

Pay off your card balance in full every month. Do not be contented paying the minimum payment. Never put yourself in a situation where you end up paying the exorbitant interests charged on your balance. If you do, the fine opportunity to stay debt-free will end up dragging you deeper into debt than ever before.

Do not wait till the last day to make your payment. Pay well in advance to avoid the interest charges and late fees at all costs.

Check that your issuer reports to relevant credit bureaus. Not all of them do so. If your regular payments are not known to authorities, your hard work to re-establish your credit history will go unrecognized. Selecting a proper card issuer who reports to major credit bureaus is essential.

You should get a bad credit credit card only if you are 100% committed to the above mentioned approaches. You should be prepared to use it responsibly to stay debt-free and rebuild your credit history.

However, do not use it for a period longer than necessary as it may adversely affect your credit history. Once you have practised discipline in using your card, built your confidence and proven yourself to be credit-worthy, move on to a general one. A bad credit credit card is often only a stepping stone.

Most Americans own at least one credit card. And of the seven in ten who do, an amazing 34 percent do not know the interest rate of the credit card they use most often. It is very easy to get a credit card. But it’s very difficult to pay back your bills in full. Our expenses are increasing month after month. Whereas our income increases only year after year.

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