Credit Cards for Bad Credit

Luckily for those with bad credit, there are far more lenders willing to offer up a credit card to bad credit borrowers than there are willing to give home loans, car loans, or any other loan. In fact, you might just find that a bad credit score ends up being a very small consideration.

Generally, credit card companies are more willing to forgive bad credit scores because they don’t make much money from people with good credit scores. People with good credit scores are less likely to carry a balance, pay late, or incur any other charges. Also, good credit score borrowers may not even have a credit card.

However, credit cards for people with bad credit usually have some of the following traits:

Higher APR – Generally, a higher than average APR is offered to bad credit borrowers. This rate ranges anywhere from 9% to 29% per month, with most bad credit cards being in the upper-end of this category. Keep in mind, though, that as long as you pay off your credit card in full each billing cycle, you won’t pay even a dime in interest.

Fewer rewards – This isn’t always the case, but many bad credit credit cards feature fewer rewards. In general, rewards are held only for good credit consumers in order to attract them to their card. Bad credit borrowers, on the other hand, are less likely to need a push to open a new credit card account.

Higher fees – Bad credit will leave you with fewer cards to choose from and more fees to deal with. These may include annual fees, higher late payment fees, and larger balance transfer charges. In general, people who pay back a card on time won’t have to worry. However, do seek out a credit card that does not come with an annual fee. Unless the rewards are spectacular, you should never, in any circumstance, have to pay an annual charge just to have a credit card in your possession.

Lower Credit Lines – Banks extend lower credit lines to poor credit borrowers. This can be a double-edged sword if you aren’t careful. A large percentage of the credit score calculation is determined by how well you manage your total accounts. IF you like to keep high balances, then you need a card with an even higher credit line. Cards with low credit lines will get you in more credit card trouble. Try to never use more than 20% of your credit line, even though it may be easy.

Shopping for credit cards
Credit cards can be shopped for in much the same way you might go shopping for a new pair of socks, or a new car. There are a few methods to shop for cards, most of which depends on how you plan to use it.

If you plan to make your current debt less expensive, you might want to start seeking out a credit card which allows you to transfer balances to it at a low rate. These balance transfer cards usually offer 0-5% interest rates for a promotional period, and they’re an excellent way to reduce your total interest payments on a large debt load you plan to pay off in the near future.

Otherwise, the second best way to shop is by APR, but shop only based on APR if you intend to carry balances on your card. It doesn’t make much sense to shop based on APR if you’re going to pay in full each month, since you won’t realize the savings benefit.

Rewards are great. While we said that rewards can be tough to find for those with bad credit, there are a few cards which give you 1% cash back on all your purchases. This means that you’ll get 1% back in the form of a check, gift card, or other “goody” when you reach a certain minimum. This minimum is usually $25.

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