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Bad Credit Credit Cards: Everything You Ever Wanted to Know

17th April 2011

Obtaining credit cards is much more difficult now than it was before the recession hit. Banks now thoroughly scrutinize credit card applicants and weed out folks that have no credit record or those with a documented history of irresponsible financial management. But while this is the case, there is still a way of obtaining credit from banking institutions, and this is through cards designed specifically for people with bad credit.

Bad Credit and Who Falls Under This

Those who've experienced monetary difficulty do not necessarily or immediately have bad credit. Here is a list of the various instances which can be considered detrimental to one's credit standing:

  1. If payments for debts are consistently late and/or below the minimum required amounts.
  2. If the debts acquired through lending institutions have gone unpaid for a considerable number of months.
  3. If credit history shows Individual Voluntary Arrangements (IVAs) have been sought out to come up with payment plans for debts.
  4. If credit history shows records of creditors filing county court claims to demand payment.
  5. If credit history bears records of CCJs or county court judgments having been implemented to order the debtor to pay the creditor/s.

Applying for a Credit Card even with Bad Credit? Consider these:

Now, if you've been through any or all of the circumstances described above, then unfortunately, it is highly likely that you are considered to have a bad credit standing. So if you are in the process of applying for a credit card, or have filed numerous applications, stop! Here's why:

  • For one, your application will most likely just be declined.
  • Secondly, you are doing your financial status a disservice by activating multiple credit score inquiries all at once.

So instead of desperately looking for banks to provide you with credit, first make calls to banks. This is whether you've already filed for credit card applications or not. Inquire what client profile they look for so that you can choose the right kind of credit card for you.

The "Right" Credit Card Choice:

Bad credit credit cards have been specifically designed to provide folks with bad credit scores the chance to remedy their financial standings. However, there is one consideration you have to keep in mind so as to truly make this bad credit credit card work for you.

Bad Credit Credit Cards and Their Interest Rates

It is worthwhile to note that these credit cards are loaded with high interest rates. Since lending money to folks with bad credit carries inherently higher financial risks, the enormous interest rates serve as the banks' protection against these.

Given such high interest rates, it is then crucial to properly handle this bad credit credit card so that you do not end up further burying yourself into more debts.

Advantages of Having Bad Credit Credit Cards

Sure, these types of credit cards come with ridiculously high interest rates. But while this is the case, there are in fact a number of notable benefits.

  1. The first advantage of these types of credit cards is their accessibility. No longer will obtaining one be that difficult. In fact, banking institutions now boast of fast processing of applications. Some even promise feedback in as little as one day especially if the application has been filed online and before the institutions' cut-off hour for that banking day.
  2. Bad credit credit cards, if used responsibly, can be the fastest cure to one's long history of financial mismanagement. Responsible use means not going over the credit limits, and paying off the balance in full every single month.
  3. One's reckless spending can also be lessened if not totally eradicated. Since most of these credit cards have low credit limits, one will tend to be more responsible with budgeting and allot only the card's funds for items that are really essential.
  4. Prepaid or secured credit cards are available for those with bad credit as well. These cards provide you with the chance to set your own credit limits to amounts that you know you can truly afford to pay off per month.
  5. And the best thing and perhaps the most important as well is the protection these cards provide. You are afforded zero liability for any purchases made under your credit card which has previously been lost or stolen.