Bad Credit Cards: How To Avoid High Fees

Bad Credit Cards

Individuals with problematic credit histories often suffer unfairly from high mortgage, insurance, and car loan rates. On top of that, they have difficulty getting approved for credit cards. The whole situation can get extremely frustrating. Frequently, I get emails from consumers wondering what they can do to rebuild their credit. The first thing I tell them is to get a credit card designed for people with bad credit. The second thing I tell them is written in bold: READ THE FINE PRINT.

There are only a limited number of credit cards for individuals with bad credit. Here, I will examine a few examples of charges current “bad credit” credit cards bury in the fine print. Of the three major cards I will examine, only one stands out as consumer-friendly.

“Bad Credit” Credit Card #1: This credit card charges a very low interest rate for an unsecured credit card. However, your first fine print glimpse reveals that there is a one time setup fee of $29. So far, since the next charge is a one time fee of $95. Add in another $48 for the annual fee and $6 per month in account maintenance fees. That’s brings the cost of your new credit card to $244 the first year, and $120 each additional year. This is no small change, and a card such as this should be considered only if you cannot be accepted for a better unsecured credit card for bad credit.

“Bad Credit” Credit Card #2: This credit card charges a very high interest rate for an unsecured credit card. There is that pesky monthly maintenance fee of $6.50 per month which brings the cost of this unsecured credit card to $107. The annual fee is a whopping $150. That not only brings the initial cost up to $257, but you will also pay $228 a year just to maintain the credit card.

“Bad Credit” Credit Card #3: This credit card is available as both a secured and unsecured credit card, based on the issuer’s review of your credit history. The interest rate is average, even competitive. Now, the fine print reveals that there is a one time setup fee. However, based on your credit, this fee can be as low as $0 or as high as $49. So far so good, especially if your credit is not that bad. But, there must be a huge annual fee. The annual fee for a secured credit card is only $35, and for an unsecured credit card, this fee can be as low as $39 or up to $79. So far, the cost of this card ranges from $35 to $128. Now its time for the monthly maintance fee. That means the most you could possible be charged to obtain this credit card is $128, about half of what competing cards are charging.

Clearly, there are substantial difference between bad credit cards. All positive changes to your credit history and credit score will translate into lower loan rates, lower credit card interest rates, lower insurance rates, and ultimately, thousands of dollars in savings. The path to rebuilding credit has its costs, but in the long term, rebuilding your credit with a “bad credit” credit card is the fastest and most cost-efficient way to correct the often unfortunate circumstances that have damaged your credit in the first place.

Source Credit Card Depot Inc.

You may want to check out Secured Credit Cards information here.