Saturday, May 5, 2012

What Are The Options On Credit Cards For Bad Credit Applicants?

Bad credit applicants know that getting finance is not an easy task when your credit report shows too many delinquencies and stains. When seeking a new credit card, bad credit applicants usually find nothing but declines from traditional credit card issuers. Nevertheless, there are alternatives for those searching for credit cards with bad credit.

Some applicants pretend to obtain unsecured credit cards of mayor brands like Visa or Mastercard with high credit limits and low interests. Though that is possible, it's not possible for those with bad credit unless you get an extension from someone else's credit card and that person has a perfect credit score. Otherwise, you'll need to contemplate your alternatives.

Secured Credit Cards: The Underrated Option

Almost everyone thinks that secured credit cards are useless. The fact that there is no actual credit limit but the amount your deposit to secure the line of credit turns them into a not-so-appealing financial product. Yet, the use these credit cards can have is particularly functional to the needs of those with a bad credit score or history.

Though initially you need to raise some money in order to put the cash down for the security deposit, then you can use the credit card just like any unsecured card. And it's an excellent way to obtain a competitive interest rate that you wouldn't otherwise get with a bad credit score and an unsecured credit card. It may seem annoying at the beginning but it's a great financial tool that will also help you recover your credit.

Store Credit Cards: The Limited Option

If you buy often on a particular shop that offers a store credit card (i.e. supermarket), it may be a good idea to request it in order to finance your purchases. Store cards are easier to obtain than unsecured credit cards and provide similar services. These credit cards are also called closed credit cards and the requirements for approval can be easily fulfilled even by those with bad credit.

The only problem with this kind of credit cards is the limitation that purchasing always in the same store implies. Unless you have cash available too, you may not be able to take advantage of promotions and discounts on other stores and may be forced to purchase an expensive item on that store that you could have obtained elsewhere for a cheaper price.

Unsecured Credit Cards For Bad Credit Applicants

Contrary to common belief, it is possible to obtain an unsecured credit card of a known brand if you have bad credit. There are banks and financial institutions offering credit card products for people that have no credit at all too. However, you need to seriously ponder the costs of resorting to these credit cards for finance as the terms do not tend to be very advantageous.

Usually, the interest rates charged for unsecured credit cards that are granted to those with bad credit are too high and the credit limits of those cards are seldom high. Thus, you won't be able to finance a significant balance and the balance that you do finance will cost you a lot of money in terms of interests. Thus, don't accept any credit card just for the sake of it. Instead, ponder the benefits you can obtain from it along with its drawbacks before accepting any credit card.

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