Bad Credit Unsecured Credit Cards - Are They Worth It?

If you have bad credit, it can be hard finding bad credit unsecured credit cards. Lenders are realizing there is a growing market however for bad credit products, and bad credit unsecured credit cards are no exception. There are a growing number of such credit card products becoming available on the market, many through well known national lenders.

The biggest downside to bad credit unsecured credit cards is that they generally have high interest rates, high fees and high costs to open an account. It's important to know ahead of time what you are getting into financially with a bad credit unsecured credit card, and determine whether your current financial situation makes it worth it to apply for one of these cards. Depending on your needs and goals, you may want to consider some other options.

First, here are some of the terms and costs you should consider when applying for a bad credit unsecured credit card:

Interest Rate: The interest rate you pay will of course be higher than standard good credit rates, but these bad credit rates can vary so be sure to check multiple products before you decide on one card. Interest rates are higher for cash advances than for purchases you make with your card. The interest rate may also go up if you are late with a payment or go over your approved credit limit. Some rates can go as high as 35% in those cases. Be sure you know what the terms are when you apply.

Annual Fee: Just as with good credit cards, you will pay an annual fee of anywhere from $50 to over $100 for a bad credit unsecured card. Be sure to find out what this annual fee is, and find out whether you can break up the payment over more than one month.

Application Fees: With bad credit unsecured credit cards, you will usually pay a one-time application fee or account opening fee. This charge can be more than $100, and the lender will use this to cover its risk that you may default and fail to pay your credit card balance.

Monthly Maintenance Fees: Some bad credit card lenders also charge a monthly maintenance fee. This is a fee to make sure the bank is making money on your account, and gives the bank some income against the possibility that you could default.

Other Fees: There may be additional fees charged by the credit card lender in addition to the fees listed above. Be sur to read all of the terms and conditions to know what all of the fees are. Even better, ask the lender to go over all the fees with you on the phone, and highlight where these fees show up in the terms and conditions as set out on the lender's web page or printed documents.

As you can see, the fees you start your bad credit unsecured credit card can total as much as $300 or more. You could also have monthly fees due in addition to having to pay for your purchases, and interest on those purchases. Some lenders will allow you to pay these fees over more than one moth - but should you pay them at all?

The question you need to ask is, is it worth it? Is it worth putting $300 up front to have an "unsecured" credit card, when that $300 is money you are basically giving to the bank for the privilege of having a credit card?

In the alternative, you might consider a secured card. For the same $300, you could put that money into a bank and get a credit card issued against your balance. All applicants are generally approved, since the bank holds onto your $300 until you pay your card as agreed. Many secured card products are reported to the credit bureaus so that you will get the benefit of improving your credit score for paying off your credit card as agreed.

Secured credit cards are temporary anyway, as you use them to rebuild good credit. After a few months of paying on time, you generally can apply for unsecured credit on better terms than you can get from the bad credit products. Often the company that gives you the secured card will offer you unsecured credit when you demonstrate a good payment history. Secured products can be a cheaper alternative to achieving the same result - restoring your good credit.

Unsecured credit is commonly thought of as the best choice for a credit product. However the high fees for a bad credit unsecured credit card can make these cards a poor choice financially. You will have to determine which is the right option for you - but knowing what to look for means you can now make an informed choice.

John Caskey, Esq. writes on a vairety of credit abnd business topics for online and offline publications. Get a FREE list of bad credit unsecured credit cards at http://www.fix-it-yourself-credit.com/unsecuredcards.

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Increase Your Credit Through Credit Cards

In order to build and maintain good credit, you must select, use, and pay on your credit cards, and other loans, wisely. Each step is important. Put them all together and your credit rating should rise. Make bad choices and you might hurt yourself in some surprising ways.

When applying for credit, only sign up for cards you're comfortable using for years to come. Getting into the habit of always signing up for the newest card and transferring your balances from the older ones to the latest with the lowest introductory rate can seem smart if it saves you interest and lowers your monthly payment. The truth is, however, that the credit reporting agencies may not be impressed, especially if you close your older cards. Payment history counts when it comes to your credit rating, so you don't want to close accounts that you have held open for many years. So, if you close your older card when you transfer your balances to the new one, you're really doing your credit score no favors. Avoid this credit rating pitfall by choosing your cards wisely to begin with and sticking to them.

The oldest myth about credit cards is the idea that you should pay off your cards every month to earn an excellent credit rating. Set your own record straight! Credit reporting agencies like Equifax and TransUnion show the most favor to credit card holders who carry small balances on their cards month to month. This proves to the agency that you're comfortable carrying and responsibly managing debt. Cardholders who follow this rule can watch their credit-rating rise.

Surely you've also heard that making payments on time is a must. Unlike the old myth above, this rule is tried and true. Paying less than the minimum payment or making your payment late will surely bring your credit score down and may also saddle you with late fees that lead to even higher balances. Always make at least the minimum payment on time to avoid being labeled slow or delinquent. If you do have late payments in your credit history, try to stay current on your new cards for at least two years. The reporting agencies pay the most attention to the recent past, not ancient history… so by getting back on track you can help your score go up.

To start building good credit with your credit card, you'll need to obtain the card, use it, and make the first payment before you'll see any effect on your credit score. You may have to sign up for a secured card in the beginning, which means you'll be required to put money into an account controlled by the credit card company in order to obtain the card. In this way, any debt you incur using the card is secured by the funds you've placed in the credit card company's account. It's a way for a creditor to take less risk when dealing with someone who has poor credit or no credit.

A secured card is just as good as any other when it comes to building credit, though. Once you've made your first payment on time for at least the minimum required amount to the creditor, you should see your credit score start to rise in the following weeks. If you carry a low balance month to month on the card, your credit should improve markedly assuming you have no other problem credit accounts pulling your score down. Other ways to build credit from scratch can include getting a low limit store card or a gas card… just be sure that you can make the payments and stay current.

While many consumers misuse credit cards and make poor decisions about purchases, management, and payment habits, you can see that responsible use of credit cards can actually be beneficial and is nearly mandatory when it comes to building and maintaining a good credit score.

For more articles on credit and how it can be improved through credit cards, visit http://www.bills.com/credit-cards/

Justin has 5 years of experience as a financial adviser; his key areas are loan consolidation, debt relief, mortgages etc. For more free articles and advice visit http://www.Bills.com.

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Apply For Credit Card-Getting Approved For A Credit Card Can Be Difficult

Getting approved for a credit card can be difficult without a positive credit history working in your favor. It's a Catch-22: To obtain a credit card, you need a good credit history. But to have a good credit history, you need to establish good credit!

This no-win cycle can keep people with a non-existent, limited or negative credit history from getting approved for a credit card. But it doesn't have to if you understand the type of credit cards available and how to build a good credit history.

When it comes to credit cards, the type of card you apply for will depend on your situation. If you're a student, you'll, naturally, sign up for a student card. But if you're a non-student with a non-existent or bad credit history, a card that is secured or obtained with a co-signer may be your best option. With co-signed credit cards, the co-signer guarantees and is responsible for the debt. This means that the co-signing person is responsible for paying the full amount of the debt if the card holder doesn't pay. In fact, when co-signed debt goes into default, three out of four times co-signers are normally asked to repay what is owed, according to the Federal Trade Commission.

Furthermore, the issuing bank can attempt to settle the debt without first trying to collect from the card holder. The bank can also use the same collection methods against the co-signing individual, including suing and garnishing wages. If the debt is not paid, it can leave a negative mark on the credit history of the co-signer, as well as the card holder.

Despite the risks, a co-signed credit card can be great tool for helping a friend or relative build their credit history so they can one day obtain a card on their own. Secured, co-signed and pre-paid credit cards offer viable options. But you should start building a strong credit history, so you can obtain a regular credit card on your own in the future.

First, you need to understand how credit card issuers determine credit worthiness. The approval criteria varies from among issuing banks, but generally relates to what's often called the three C's of credit: capacity, character and collateral. Capacity refers to your ability to pay based on your income and existing debt. Collateral refers to any assets you have that can secure payment, such as bank accounts or home ownership. Character refers to factors like your payment history, length of employment, etc.

To get a good idea about how your application will fare with credit card companies, check your credit history with one of the major credit reporting agencies: Experian (www.experian.com), Equifax (www.equifax.com) and TransUnion (www.tuc.com). These agencies access your payment information directly from the companies you have credit with, as well as from government agencies such as the legal court system.

Credit reporting agencies use the information in your credit history to determine your credit rating or credit score. Credit scores, also known as FICA or Beacon scores depending on the CRA, generally range from 350 to 850. Most banks will approve you for credit if your score is at least 620. If your rating is 720 or higher, banks will offer you their lowest interest rate.

Generally, y our credit score is determined by your payment history for the last two years. T echnically, CRAs calculate your score using a closely-guarded formula. TransUnion, for example, determines credit scores using a variety of factors, including: how you pay your accounts, how much you owe and how often you've applied for credit.

http://www.credit-cards-rates.co.cc/

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