Credit Cards For Bad Credit Help Rebuild Credit History
Persons who have had a tough financial experience are not necessarily shut out from holding a credit card and they can come in handy for a variety of uses such as renting a car or making online purchases. Many companies are willing to issue credit cards for bad credit histories, typically at considerably higher interest rates and most having monthly fees as well. However, for those hoping to rebuild their credit report, credit cards for bad credit could be a good investment in their financial future.
There are several companies willing to take a chance on an individual that may have some credit problems in the past. Although considered a high risk, especially in the non-secured loan market, credit cards for bad credit can help them grow their credit report from a negative level into a better history. Many of the offers seen in commercials apply only to those with stellar credit histories and credit cards for bad credit can help a person reach that level of acceptance.
Usually, credit cards for bad credit come with an initial charge as well as monthly fees that are put on the card balance at the time of issuance. For example, a low credit limit of $300, for instance, may have as much as $200 or more charged to the card before the applicant ever receives the card. In some instances, a $250 initial balance will leave less than $100 in available credit until the initial charges are paid down.
Options Vary By Credit Card Companies
Most credit cards for bad credit are not issued by traditional banks; rather they are sponsored by companies formed by investors looking to make money on their investments. The new cardholder benefits by being able to hold a credit card and use it while paying off the initial balance, and the investors earn money from the often-exorbitant fees attached to the cards.
With many of the credit cards for bad credit once the user has paid down the balance and shows they are a good credit risk, the limits can be raised. Some companies charge for evaluating the increase in the credit limit, but most do not reduce the interest rate on the cards over the life of the cardholder's dealings.
However, once people have established themselves in the market by using credit cards for bad credit they may eventually qualify for a credit card, at a much lower interest with the same company or with other card issuers. Using credit cards for bad credit may be expensive from the start, but over time can reduce their costs of having available credit.
