Bad Credit Credit Cards - How To Get One
Recent harsh economic times have meant more and more people have picked up some form of bad credit information on their credit file. Whether it's late payments on a loan, missed catalogue payments, or mortgage arrears, every financial misstep you make is recorded and is available to potential creditors when they are deciding whether or not to approve your application.
Even in the years of cheap and easy credit, this made it more difficult to get a credit card than if you had no blemishes on your file. These days, with credit in general in scarce supply, having a poor credit rating makes it harder than ever to have a credit card application approved.
This doesn't mean you have no options though.
The first and most obvious point to make is that you need to be realistic when applying for a card. The top-of-the-range cards offering great APRs, cashback deals, balance transfers and so on are not likely to be available to people without excellent credit ratings. If you apply for one of these 'best buy' cards, you're likely to be rejected if you have any sort of adverse information on your credit file.
Not only is this a waste of time, it can actually make the situation worse as every failed credit application is recorded on your file, and too many entries of this type will make your overall credit rating worse than ever.
If your credit rating is reasonable, with no serious black marks such as defaults or CCJs, you may be able to get a general card from your bank, which while it won't have a whole lot of benefits or attractive features, it will do the job at a reasonable interest rate. If, however, your credit rating is really not so good, you'll have to look elsewhere.
Specifically 'Bad Credit' Credit Cards
There are a range of cards on the market which are specifically aimed at applicants who have poor credit ratings, or no credit history at all on which the issuer can make an informed decision. These cards, of which the most well known is probably the Capital One Classic, have little in the way of features - you won't find cashback, rewards, or 0% balance transfers on these cards - and will also tend to have a low credit limit to begin with (although your limit can be raised over time as you keep your account in good standing).
The main drawback of these cards is that they have a high interest rate (APR). Whereas mainstream cards usually have an APR in the mid teens to mid twenties, bad credit credit cards usually start at about the 30% APR mark and rise up to 50% or even higher depending on how bad your credit rating is. These high rates are to protect the issuer against the greater risk of defaulting which comes with issuing cards to people who've had financial problems in the past, and is something you'll just have to accept if you're in the market for a bad credit credit card.
The trick to making these cards work for you is to use them for convenience when paying online etc, but to clear your bill in full each month so as to avoid paying any interest on what you've borrowed. Even if you can't clear your account every month, you should try to run as low a balance as possible - even more so than other forms of credit, these cards are very far away from being 'free money', so use with caution.
If your credit rating is extremely bad, you may not have the option of getting a regular credit card, but if you want to enjoy the convenience of paying by plastic, all is not lost - a prepaid or secured credit card might be an option worth looking at, which we'll cover in depth in a later article.
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