"Bad Credit" Credit Cards: How You Can Avoid High Fees
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People with bad credit histories are often unfairly exposed to higher interest rates on mortgages, insurance, and auto loans. In addition, it is very difficult for them to get credit card approval. The whole situation can get very frustrating. I often get emails from consumers asking what they can do to rebuild their credit. The first thing I tell them is get a credit card designed for people with bad credit. The second thing I tell them in bold: read the fine print.
For individuals with bad credit, there are only a limited number of credit cards. At first glance, many are similar. They all help build and rebuild your credit by sending monthly statements to major credit bureaus. They all give you the Visa or Mastercard you need to make many purchases. It's a necessary evil that can save you thousands of dollars in future mortgage and auto loan interest rates. However, you should read the nitty-gritty before applying for one of these credit cards, as they often have hefty annual, setup, and even monthly fees. Here I'll examine some examples of current "bad credit" credit card fees hidden in lowercase. Of the three main cards I checked, only one was consumer-friendly.
Credit Card “Bad Credit” #1: This card charges very low interest rates compared to unsecured credit cards. However, there is a $29 one-time setup fee once you view the fine print. responsible. Until now, because the next bill is a one-time fee of $95. Our cost so far is $124. It must be, right? number. Plus a $48 annual fee and a $6 monthly account maintenance fee. This makes your new credit card cost $244 for the first year and $120 annually thereafter. This is no small change and should only be considered if you can't accept unsecured credit cards, which are more beneficial for bad credit.
“Bad Credit” Credit Card #2: These credit cards charge very high interest rates for unsecured credit cards. It is not good. But the setup fee is only $29. Maybe this card is fine. An obnoxious $6.50 monthly maintenance fee brings the cost of this unsecured credit card to $107. We may have found an offer. Neither did he. Annual fee up to $150. Yes, $150 per year. Not only does that bring the initial cost to $257, but you'll also be paying $228 annually to maintain the credit card. There has to be a better deal.
Credit Card “Bad Credit” #3: Depending on the issuer's review of your credit history, this credit card may be classified as safe or unsafe. Interest rates are average, even competitive. Now, the fine print shows a one-time setup fee. However, depending on your balance, this fee can be as low as $0 or as high as $49. So far so good, especially if your credit is fine. However, there must be a very large annual fee. not exactly. The annual fee is only $35 for secured credit cards and as low as $39 and as high as $79 for unsecured credit cards. So far, the card has been priced between $35 and $128. Now it's time to pay for your monthly maintenance fee. It should be big or not? is $0. This means the maximum fee on this card is $128, about half the cost of competing cards.
Obviously, there is a big difference between "bad credit" credit cards. Of the three offerings we looked at, only one won't send you to the dry cleaners. In fact, the third-ranked "bad credit" credit card offers very good value. All of these positive changes in your credit history and credit score will translate into lower loan interest rates, lower credit card interest rates, lower insurance rates, and ultimately thousands of dollars in savings. The path to rebuilding your credit has costs, but rebuilding your credit with a "bad credit" credit card is the quickest and most cost-effective way to fix an unfortunate situation that hurt your credit in the long run in the first place.