How To Get A Credit Card With Bad Credit History
We all know that getting approved for a credit card itself is a difficult procedure, let alone getting approved for a credit card with bad credit.
However, a credit with bad credit is designed exclusively for customers that have a bad credit score and can’t get approved for a credit card due to a bad credit history.
If you are looking for a credit card with bad credit history, you will typically get two offers from lenders such as:
- Prepaid credit cards
- Secured credit cards
Yes, you guessed it right: both prepaid and secured credit cards require you to put up your money first into a bank account and the available balance on these credit cards will be the money you have in your account.
So both are the same right? Well, NO. Although the basic concept of prepaid cards and secured credit cards are the same, there are some significant differences that make them very different.
Prepaid credit card with bad credit
A prepaid debit card is linked to your bank account and your withdrawal/transaction limit is exactly what you have in your credit card.
However, the money is deposited to the card rather than a bank account through various methods such as wire transfer, cash or direct deposit.
When the funds on your credit card are exhausted, you need to fund more money to use the card. Simply put, a prepaid credit card is sort of a reloadable credit card and is very identical to that of a debit card.
Things To Note:
- With prepaid credit card with bad credit, you are spending the money you already have so it can’t improve your credit score.
Secured credit card with bad credit
A secured credit card requires you to make a fixed deposit, anywhere between 250 to 5,000 dollars, to get a new card. This money is the security for the bank to get their loaned amount back if you end up not paying off your debt.
Interestingly, this card is very easy to get approved since you are covering your risk with a deposit.
- A secured credit card with bad credit can help you to rebuild your credit score.
- Most people use this type of cars to build a credit score after filing for bankruptcy or foreclosure.
The downsides of using both prepaird and secured credit card are that they both have some fees. A secured credit card will also charge you interest like a regular credit card for paying back the borrowed amount in installments. This is imperative to note because a prepaid credit card doesn’t cost you any interest but most have a monthly fee.
However, a prepaid credit card with bad credit is identical to a checking account and it is an alternative to carrying cash but a secured credit card can actually help you to build a credit score and get qualified for bigger loans in the future.
Make your choices based on your requirements to get the maximum benefits.
Courtesy of CreditCardShoppe.com
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