Credit Card Debt Relief

Thursday, March 8, 2012

Good Credit Cards For Bad Credit

Since the state of the economy has taken a sharp dive into the pit of inflation, increased fuel prices, lay-offs failing banks, it's no wonder there's a large consumer population fighting bad credit ratings. Consumer debt rates are at an all time high and finding good credit cards for bad credit ratings can be difficult. Ironically there is an upside to this dilemma where good credit cards for bad credit ratings can provide an opportunity for consumers getting through these tough economical times. In some cases consumers are able to boost scores by consolidating debt. Let us explore which credit cards are good for bad credit and how to use them to turn bad credit scores around.

How to Whip Bad Credit Back Into Shape: From Bad to Good Credit

No matter how hard people try to stay above financial turmoil and poor credit, they may in the current economy, find themselves sinking deeper in to debt. Soon their optimistic attempts to pay off those creditors rebounds. The monthly onslaught of bills builds to become a bleak impossibility of crawling out of debt. Daily consumers in over their heads are reminded of their situations. Poor credit scores ensue from the bad payment history that accumulates at times like these. This in turn results in credit denial.

There comes a time when the wheel just stops. When your credit merit is worth less than the paper it's printed on; or the amount of debt you carry is higher than the cost of a luxury car; your chances to ever live life debt free again begin to wane. Especially if job cutbacks and pay reductions become part of the picture.

Consider the fact that the only way to legally change bad credit is to find a better paying job to pay off those credit accounts.

However, this is a catch 22 solution that can have a frustrating and disheartening outcome. Nowadays employers consider credit report histories as a contingency for hire. This means that while your credit score is poor, the possibility of finding a higher salaried job to pay off your debt becomes less likely since employers will only hire people with good credit ratings. The center does not hold. Now what do you do?

Many people with bad credit look for alternatives such as credit consolidation or credit cards for bad credit as a solution. While this may seem like a good idea, the truth is having a credit card with bad credit can make matters worse, if you don't know what you're doing. This is especially true if you do not have the proper guidance on what types of credit cards are good for people with bad credit. There is little improvement in the situation without implementing preventitive methods to avoid getting deeper into debt. Transfer of debt does not eliminate the basic problem.

One of the advantages of the current economy is the competition that has ensued among credit card companies. These lenders want to gain more business by lowering approval requirements so people with bad credit can accomplish a transfer more easily. Using this opportunity to repair a poor credit rating is simple. The important thing to consider is the bottom line. How will payment amounts, payment due dates, interest rate and potential fees and penalties work to the advantage of the consumer?

There are a number of good credit cards to fix bad credit and even show an improvement in credit scoring in just 3 months. Let's take a look at different credit cards available to people with poor credit scores.

Bank Account Credit Cards - Typically banking institutions can approve credit cards and limits with an excellent APR interest rate even if the credit score and payment history is poor. That is of course when there is a direct deposit of income on a monthly basis; when the Checking and Savings accounts are active and in good standing; and when the member is able to keep a minimum of $200 dollars in both accounts. This will increase the chances of credit cards being approved based on collateral.

Secured Credit Cards - Much like a bank credit card issued based on checking or savings account holdings; secured credit card lenders are private and can use collateral of any type including propergy, a saving account or other annuities when approving a credit card with bad credit. And because of the secured collateral, APR interest rates can be much lower and the payment terms more reasonable. In some cases they become negotiable.

Unsecured Credit Card - These are the pre-approved credit card offers received at home and in emails. Across the board unsecured credit cards charge very high interest rates generally but they're even higher for people with bad credit. So if you have bad credit you should expect higher interest rates than someone with good or excellent credit.
  • When applying for an unsecured credit card, be careful to review the monthly, annual or other fees associated with that specific credit card. These fees can accumulate to extreme amounts that will get you into even more financial trouble over time. In this case being picky and shopping around for better rates and lower fees is an asset. When in doubt don't flip your debt to a new card.
  • Most people reverse the effects of rebuilding their credit using an unsecured credit card by failing to pay off the monthly balance faster. The comfort of paying the minimum monthly rate is much easier for most people to maintain, however, credit card companies make more money this way because of the high interest rate associated with the extended payment schedule.
Paying over the minimum amount on your current cards when possible will keep your monthly account balance to a minimum, which is cheaper in the long run, builds credit faster and improves the chances of receiving increased credit limits and/or lower interest rates.

No matter what type of credit card for bad credit you choose, always make sure that you make your payments on time and it's best to make a larger payment than required whenever possible. So long as you maintain good credit card standings with any debt or expenses that are reported to all three credit reporting agencies,you will see an improvement in your credit rating. Then hopefully, seeking and finding good credit cards for poor credit will become a thing of the past.

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