Credit card terms and conditions are usually pretty hard to understand, and when it comes to cards for those with bad credit, they are even harder to comprehend. For those with subpar credit, the choice of credit cards is severely limited, and when a person does qualify, their credit limit is usually lower and their interest higher. That can make it harder for those who need help paying off credit cards after college. Lenders try to sweeten the deal with “rewards” and other perks, which can make the decision that much harder. Here are some of the things you need to know about credit cards for people with lousy credit.
When you see an offer for a “cash back” credit card, or offers of discounts on products, airline miles, and other things, it can be pretty tempting. Don’t go so fast- you should completely read the terms and conditions on the application. If you are slapped with higher annual fees and a higher interest rate, those perks aren’t really worth it. The money you will save will probably be enough to buy those airline tickets or products.
When you’re going through those credit card appications, you will see that the deposit requirement varies from card to card. Some cards ask for as little as a few hundred dollars, but they can require deposits of a few thousand dollars. Your credit limit can be from 50 to 120% of your deposit, and if you find a card offer that touts its “no deposit” status, steer clear. Most lenders make up that amount in the form of astronomical application fees, maintenance charges, and processing fees.
Look for a conversion feature. This is seldom advertised, but it will afford you the option of changing the status of your card from secured to unsecured after you prove that you are capable of making timely payments. Lenders who make this offer like to see at least a year’s worth of prompt payments, and if you qualify, you will save a lot in the form of reduced fees and interest.
If you have bad credit, your choice in credit cards may be a bit limited, but if you do a lot of searching and ask for credit card advice, you can get a good secured card that has reasonable terms and conditions. These will allow you to reestablish a good payment history, and make it easier to qualify for unsecured cards in the future.