The Right Steps to Get a Credit Card
if You Have Bad Credit

Credit cards are a good financial tool to have. However, if your credit is bad, it can be difficult to obtain a credit card. Don't panic; it's only difficult, not impossible.

Effects of Bad Credit on Getting a Credit Card

Your bad credit demonstrates to an issuing bank that you are not responsible enough to handle a large amount of debt. As a consequence, you may receive a credit limit as high as $1,000, or maybe as low as $250.

Your bad credit means your credit card APR will probably be as high as 24.99 percent or even higher. You may also be forced to pay a high annual fee for your credit card as well, which usually will be taken from your balance once your card is issued. This means you already have a balance to pay before you even make a purchase.

Secured Credit Cards are an Option

Sometimes bad credit can be too much of risk for an unsecured credit card, so an issuing bank may offer a secured credit card instead. A secured credit card is a credit card that is backed by a certain amount of money that you give the bank up front. However, you can still end up with high finance charges to pay along with late fees and overdraft fees.

With bad credit, an annual fee for your credit card may be added once your card is issued you'll start with a balance to pay.

The good thing about having a secured credit card is that it can be a useful tool to get your credit back in shape. If a secured credit card is all that you obtain, inquire if the card will transition over to an unsecured credit card provided that you pay your bill on time and don't go over your limit. Also make sure that the issuing bank reports to the major credit reporting agencies each month. Every payment you make on time, be it on a secured credit card or an unsecured one, helps to improve your credit.

Prepaid Credit Cards

A prepaid credit card allows you to only spend the amount of money you pay up front to "load" onto the card. A prepaid credit card also will not cause any additional damage to your credit. On the flip side, these cards cannot do anything to improve your credit report, either.

Dealing with Bad Credit and a Credit Card

Whether you have a secured or unsecured credit card, you have to use it wisely. Only make credit card purchases that you have the cash to pay for. This way, you will be able to pay your bill on time and improve your credit.

Try to avoid balance transfers, which are viewed as cash advances on the credit card and come with APRs that can be higher than your purchase APR. Most importantly, try to make at least your minimum payment on time every month. If you have experienced trouble with your mailed payments reaching the issuing bank on time, then enroll in automatic bill payment or have your bank pay the bill directly from your checking account.

Don't allow bad credit to hold you back. Obtaining a credit card with bad credit is possible.

ShawnTe Pierce

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