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Credit Card Options for People with Bad Credit

Banks and credit card companies only offer credit cards to people with good credit score. Your credit card application will not be approved by banks or credit card companies if you have a bad credit history. However, you can still find some providers which have specific cards for poor credit.

If you have a low credit score, then the risk will be greater when you are being considered for borrowing money on a credit card. If you want to apply for an unsecured card then this would mean an very high interest rate to compensate for the likelihood that you will not be able to meet some payment. You credit card limit will also be lower. And you will not be given any perks that people with good credit rating enjoy. This includes cash back or air miles.

If you have a poor credit history, then a better option for you is a secured credit card. In a secured credit card, the provider will ask you for a form of security for the credit card. The credit limit of the credit card is determined by the balance on a savings or current account. You will get a credit limit that is slightly lower than the amount in your savings account. Not all lenders have the same policies so you need to check their terms and conditions on this.

Some providers allow you to increase your credit limit if the amount in your savings deposit also increases. IF you have been making regular payments, the card issuer may grant you an increase without requesting further secured funds. It is according to the discretion of the lender to increase the credit limit.

Applying for a joint account with a family member with a good credit rating is another option you have for applying for a credit card with bad credit standing. Financially, this is the best option as the terms will be the same as a normal card when it comes to interest rates. Make sure that you don’t miss out on your monthly payments. If you fail, the co-signatory will need to make the payments on your behalf. If he fails to do this, then both credit histories will be affected.

It pay to shops around for the best card for bad credit. There are some lenders that charge an application fee and most lenders charge an annual fee on a secured credit card. Some fees are small but you should be aware that some less reputable card issuers take advantage of people who have trouble obtaining credit and charge overpriced costs.

Paying your monthly dues will help you improve your credit score with your credit card for bad credit.

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