How to get a credit card with bad credit
Poor credit credit cards are credit cards that are created for people with bad credit ratings. These cards provide opportunity to the people to use credit cards as well as to improve their credit rating (that’s probably YOU).
Bad credit credit cards also act as a training ground for the people to build new spending habits (that’s you too!).
Bad credit cards are also called secured credit cards. They’re called secured because credit card issuers require consumers to open up an account and maintain some cash balance in the account. This requirement is made to protect the issuers from non-payments of defaulted credit card holders.
The credit card issuer will pay interest on the balance in a consumer’s account.
And the credit limit on the bad credit credit card is determined by the 50-100% of cash balance in the account. So, card holders actually draw their own money and it’s not a surprise that these cards are also referred to as debit cards.
If you’re looking for a suitable bad credit card, you’ll find plenty of credit card offers in the market. To find a suitable credit card you can analyze some offers using the following selection criteria:
The minimum required balance in the bank account,
the application fees and/or other charges,
the credit limit or the allowable spending limit of your bank account balance, and the rate of interest of the balance in your bank account.
A good credit card offer would require a very small amount of minimum bank balance and would have no fee or charges associated with it. It would also offer a good interest rate and have a credit limit within 90-100% of the bank balance.
Bad credit credit cards are usually easier to obtain because banks or credit card issuers are secured by the capital that you will be charging against. Even though the application process of a bad credit card is simple, it is usually costlier than an unsecured credit card.
So, before applying for the card, find out the total fees and whether it would be refunded or not if the bad credit card application is denied.
Now, once you have decided which secured credit card is best for you, here’s what you do.
You scrimp and save until you have at least $250. You then open a new bank account. Preferably at a bank that you have not dealt with before now. You then put your $250 into this bank and then forget that it’s in there! That’s right.
Just forget about this $250. It’s gone. You no longer have access to it. Don’t even think of it. After you’ve forgotten about it for about a month, you go in and tell the customer service representative that you want to apply for a “secured credit card.”
You then fill out the application, turn it in and leave the money alone and go home and back to your normal routine.
Your secured credit card will arrive in the mail in about 4 to 6 weeks. All this while, you’ve been working diligently at your job and paying what you can on your bills, right? I hope so. Keep in mind that the money that you’ll be using with this credit card is YOUR money.
You don’t really have any credit rewards at all and you are only allowed to spend about 1/2 of the $250 that’s in the secured account. So, once a week, you go out and buy yourself (NO ONE ELSE) lunch for no more than $15 and charge it onto your new secured credit card. You’ve gotta eat lunch, so why not treat yourself to lunch at least once a week (and ONLY once a week)? At the end of the month, that should add up to about $60 to $75, depending on the card’s billing cycle.
Here’s what you do and you do it every month, without fail and you do it as soon as you get the bill. Don’t wait for the bank to take the money out of your secured account.
You send them the $60 - $75 and leave the balance in your secured account alone. On the days that you are not treating yourself to lunch,you pack a lunch and eat at work. That’s right! Don’t even think about buying lunch even if you have to eat yesterday’s leftovers, you pack your lunch every single day except that one day of the week. Consider that day a reward for saving money the rest of the week.
What you’re doing here is repairing your credit with a simple credit card. Don’t EVER use the money in that account. Always pay it off every month and do it on time. This will help establish your new credit during the 5 - 7 years that your credit information reflects the poor credit.
If, for some reason, you somehow do not have the cash, during the week, to buy your lunch, just forget it. Don’t do it. Wait until the next time that you DO have the cash. Don’t try to force anything. Only use cash money that you have available.
Don’t use your secured credit card for anything else yet. We’ll build it up and use it for other things later, but for now,just lunch and only once a week if you have the cash to put back and pay it off at the end of the pay cycle.
This is how you appropriately use a bad credit credit card. You are on the road to recovery but you’ve just started and you are forming new spending habits and spending patterns.
Keep in mind that if you have bad credit you don’t have a lot of choices. You cannot get unsecured credit cards that are offered only to the borrowers with a good credit history. In this situation a bad credit credit card offers some help.
The plastic money can let you enjoy the benefits of credit cards and at the same time help improve your credit rating.
By Gary Vaughn
