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.
There are only a limited number of credit cards for individuals with poor credit. They all help improve your credit by reporting to the major credit bureaus on a monthly basis. However, you must read the fine print before applying for one of these credit cards, as they often charge high annual fees.
Here, we will look at a few of the types of of charges “bad credit” credit cards bury in the fine print.
“Bad Credit” Credit Card #1: This credit card charges a extremely low interest rate for an unsecured credit card. However, reading the fine print exposes that there is a one time setup fee of $29. Not too shabby. The next charge is a one time fee of $95. So far, we’re up to $124 in expenses. You would think enough would be enough, right? No. Add in another $48 for the annual fee and $6 per month in account maintenance fees. That brings the cost of your new credit card to $244 the first 12 months, 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 extremely high interest rate for an unsecured credit card. But the setup fee is only $29. There is that pesky monthly maintenance fee of $6.50 per month which brings the cost of this unsecured credit card to $107 per year. Maybe we’ve found our next credit card. Not quite yet. The annual fee is a whopping $150. Yes, $150 every year. That not only brings the initial cost up to $257, but you will also pay $228 a year just to maintain the credit card. There has to be a cheaper offer out there somewhere for people with bad credit.
“Bad Credit” Credit Card #3: This credit card is available as a secured credit card and unsecured credit card, based on the companies review of your credit history. The interest rate is about average. Now, the details of the offer reveals that there is a one time administrative 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. The annual fee for the 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. The monthly maintance fee is only $0. 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 differences between all of the“bad credit” credit cards that are available. Of the three offers we have examined, only one doesn’t take you to the cleaners. In fact, “bad credit” credit card #3 provides great value.
As you know by now 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.
