Getting a Bad Credit Credit Card
Bad credit history can make it troublesome to get another credit card, but not impossible. Many banks offer bad credit credit cards to help individuals with good intentions to reestablish a positive credit rating.
There are two categories for bad credit credit cards to fall under, secured and unsecured. A secured credit card will require you to deposit a certain amount of money, from several hundred to several thousand dollars, into a savings account as security for the line of credit. Your credit line is a percentage of the deposit usually somewhere between 50 and 100%. The bank then issues you a credit card with a spending limit equal to your credit line. Your deposit will be used as collateral for this credit. If you fail to keep up payments or pay the balance, it will be taken out of the collateral. Some programs may even pay you interest for your deposit, but might have application and processing fees.
You will not be required to offer anything as security or collateral for an unsecured credit card for bad credit. Instead, you’ll be issued a card with a low spending limit around a few hundred dollars to a couple thousand – these usually come with very high fees. If you prove your ability to make payments on time, you may soon find your spending limit is increased. Be certain that the card issuer reports to a credit bureau so that when you make your payments on time it benefits your overall credit score.
It’s important when trying to get another credit card with bad credit to avoid scams and deceptive advertising. A campaign has been launched by the Federal Trade Commission (FTC) to take action against misleading companies and false advertising in this industry. Know what the telltale signs of credit card scams are. Some examples would be offering you a card without a credit report, needing to call a 900 number for which you are billed, and any card offered by a credit repair company.
If you’re trying to rebuild your credit with the new credit card, most major companies such as Bank of America, Bank One, Capital One, and Chase can help you get a secured credit card. This can really help your credit rating as every payment made on time is reported to at least one, if not all, of the major credit bureaus. If you keep up the payments, your credit score will rise, and you may find yourself being offered an unsecured credit card with a spending limit higher than you’ll ever need.
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