Benefits of Owning a Credit Card for Bad Credit
If your credit is not exactly stellar, you might think of getting a credit card for people with bad credit. Apart from having a serviceable card in handy, you can actually gain from it in larger ways.
Repairing your credit.
If you have damaged credit and you want to repair it, a secured credit card can be your best friend. It is a credit card that is secured against a cash deposit of about $200 – $500 or the credit limit itself. This is often used by people with poor or no credit in order to prove their creditworthiness to lenders before upgrading to or applying for an unsecured card.
After getting your secured credit card, make sure you pay your bills on time and in full every month. If you do this, your payments will show in your credit report, and lenders will be pleased to see this.
To gain the most from a secured credit card, find out whether the card company reports your payments to each one of the credit bureaus. You need to be sure that your efforts to repair your credit are on record.
Upgrade to an unsecured card.
Yes, you can move up to a regular, unsecured card after a while of using a secured credit card and making consistent and full monthly payments. By then, lenders will have noticed the improvement in your situation and deem you responsible enough for unsecured credit. Your secured card issuer may even offer you unsecured credit on your secured account, meaning you have greater spending power. But remember to check the interest rate while you move along as it could be unreasonably high.
Improve your money-handling skills.
There’s definitely a reason your credit is what it is, and poor money management skills may just be a factor. You can learn some by using a credit card for people with bad credit. It will make you more careful about your spending and force you to make those monthly payments on time.
Options for Credit Cards for Bad Credit
So far, secured cards seem to be the best options for people with poor credit. With such cards, you pay a refundable (when you close or upgrade your account) security deposit, which basically protects your provider if you fail to pay.
Another option would be unsecured cards for bad credit, which requires no deposit but charges quite high fees. Lastly, you might consider store credit cards which are much easier to get, but usually with low credit limits and high interest rates.