The Truth About Credit Cards For People With Bad Credit

FinanceLoans / Lease

  • Author Max Anderson
  • Published April 29, 2007
  • Word count 955

When it comes to credit cards for people with bad credit, there are dozens to choose from. However, that doesn't mean they are all good credit cards to have. While some bad credit credit cards really do work towards improving a person's credit, others do nothing but fleece the pockets of those who need a second chance.

Here are seven things to look for when dealing with credit cards for people with bad credit.

  1. Fees, Fees and More Fees

It is true that credit cards for people with bad credit almost always have an annual fee attached to them. That being said, a few of the questionable bad credit credit cards charge much more than just an annual fee.

One of the popular credit cards for people with bad credit advertises a $48 annual fee. Not bad, right? It wouldn't be -- if that's where the fees ended. Unfortunately, this card also charges a processing fee of $29, a one-time program fee of $95 and a participation fee of $6 each month.

That's a whopping total of $178 being charged to your card before you even get it in your hands. Considering most applicants only qualify for a credit limit of $250, that leaves you with an available credit line of just $72. Not exactly the credit card you were hoping for, is it?

Do yourself a favor... When dealing with credit cards for people with bad credit, make sure you understand all of the fees involved and don't just judge a card by the annual fee or the interest rate.

  1. The Facts About Secured Credit Cards

When looking for credit cards for people with bad credit, there are two categories of cards you will be looking at. These categories are called secured credit cards and unsecured credit cards.

With a secured credit card, you have to secure your line of credit with a savings account. Sometimes your credit limit will be equal to your savings account and sometimes it can be more. It really depends on the specific credit card and your personal situation.

Now understand that when you place a deposit for a secured credit card, it goes into a savings account. This is much different from a prepaid credit card. A prepaid credit card will require a deposit as well, but it works more like an ATM card than a credit card and it doesn't get reported to the credit agencies.

Because people looking for credit cards for people with bad credit usually want to improve their credit rating, it's important that you find a true secured card and not a prepaid card. Otherwise, you're not doing your credit rating any good.

  1. Cash Up Front Is a Con

We've discussed that credit cards for people with bad credit often charge fees. This doesn't, however, mean that it is acceptable for them to ask you to pay for these fees up front before they issue you a card.

If a credit card company wants you to send them money before they send you a credit card, run in the other direction. Nine times out of ten, it's a scam. You'll never get the card and you'll be out your hard-earned money.

  1. They Want To Charge You What?

Yes, you have bad credit. No, it's not the end of the world and you don't deserve to be tortured with ridiculous interest rates.

I've seen credit cards for people with bad credit that charge more than 20 percent interest. Forget about them. Even with bad credit, you should be able to get a credit card with a decent interest rate (lower than 18 percent).

  1. Rewards vs. Rates

When looking for credit cards for people with bad credit, you might be surprised to find rewards cards on the table. Yes, people with bad credit can qualify for rewards credit cards -- but you will pay a price.

Before applying for bad credit credit cards that offer rewards, remember that these credit cards usually have higher interest rates attached. Since you're working on rebuilding your credit, you may want to focus on the lower interest rate rather than the rewards aspect of the credit cards that are available.

  1. Reasonable Grace Periods

Before applying for any bad credit credit cards, make sure you know what the grace periods are. Late payments may be what got you here in the first place, and if you want to get your payments in on time, you're going to need time to do it.

Many credit card companies have whittled their grace periods away to little or nothing. Credit cards for people with bad credit should offer a minimum grace period of 20 days (preferably 25). If the card you are thinking about applying for offers a grace period of less than this, you should look elsewhere for your credit card needs.

  1. The Respect Factor

While respect may not be something you think about when looking for credit cards for people with bad credit, it is definitely something you need to consider. Credit card companies should treat you with respect, regardless of your credit history.

One woman I know inquired about the high fees associated with a certain credit card and was yelled at by the company's employee. She was also criticized for her credit history and was basically told she deserved to pay the high fee. This is completely unacceptable. The companies offering bad credit credit cards that treat you with anything but the utmost respect should be avoided at all costs.

Remember, bad things happen to good people. You may have credit issues now, but you won't always be in this boat. By following the above advice and applying for good credit cards for people with bad credit, you'll make your first steps towards repairing your past and building your future.

For more tips on getting the best bad credit credit cards, saving money and avoiding getting taken, check out, a website that specializes in providing credit card tips, advice and resources.

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