Published on August 23rd, 2015 | by EFH9990
Credit cards for people with bad credit
Credit cards for bad credit
Bad credit credit cards are offered by many banks as financial tools to help people establish or re-establish their good credit rating. These cards are primarily intended to make it easier to obtain re-build credit, which is good for consumers and merchants as well. For all practical purposes, these credit cards are like the usual cards, but they are specifically for high risk cardholders. A credit card for bad credit can fall under two categories – Secured and unsecured credit cards.
With secured credit cards for bad credit, you will be required by the bank to deposit a certain sum of money in your savings account as security for your line credit. Your credit line is a percentage of your deposit, somewhere between 50 to 100 percent. The bank will then issue you a card with a limit equal to your spending credit line, which will serve as guarantee for the use of for the card. The money in the savings account, or guarantee, will be used to pay off the balance if you fail to pay the balance of your credit. It is also likely that you will be paid interest on your deposit, but you may also have to pay the application and processing fee.
As for unsecured credit cards for bad credit, the bank will not require you to deposit a sum as security or guarantee. However, you will be issued a credit card for bad credit with a low spending limit. Your spending limit will also be increased if you continue to prove your ability, and good intentions to make payments on time. Make sure the issuer reports to a credit bureau if you are applying for a secured card to build or restore a bad credit record, so good credit history can be built by the bureau.