Credit Cards for Bad Credit to Help you Get Started or Rebuild

by Tracy Murray-Crouch

Let’s take a close look at credit cards for bad credit, because if you sign up for the very first one offered to you I think you’ll probably end up regretting your decision (because you’re going to be paying fees and interest rates that might not have been there with another card). Of course when it comes to choosing a credit card you’re always looking at a few standard criteria, such as annual fee, credit limit, deposit required (if it’s a secured or prepaid card), APR on purchases, cash advance APR, balance transfer offers, and of course the all-important rewards programs.

Not all of those factors are going to come into play with credit cards for people with bad credit. For example, these kinds of cards aren’t typically going to have rewards programs or special offers on balance transfers. These cards are geared more toward people who’ve either really messed up their credit or are just trying to get their foot in the door of the credit world.

The big distinguishing characteristics of this type of card are the fees, the deposit required, and the purchase APR.

You’re likely to see many of these cards start with a 9.9% APR on purchases, which isn’t terrible. If you have some kind of credit, albeit damaged, you can probably get a minimum credit limit of around $250 without a deposit, but the fees are where they’ll get you.

I checked out three different Mastercards for bad credit, and the fee structure just blows my mind. Let me summarize their fee disclosure paragraph from the offer (small amount of sarcasm included):

“If we happen to qualify y0u for a credit card, we’re going to take all our fees for the first year up front. This includes an account set-up fee of $29, a program fee (huh?) of $95, and on top of that we’re sticking you with an annual additional fee of $48. But wait…there’s more! We’re also going to charge you $7 per month for ‘participation.’ All of these charges will be on your first statement, and your available credit will be whatever happens to be left over when we’re done with you. If your credit limit is $250, you’ll be left with the grand sum of $71 available on your card.”

Kind of hilarious right? But let’s keep this in perspective. Credit card providers have to make money, and as a no credit or bad credit applicant you pose a big risk. They’re giving you credit and immediately getting monthly payments from as a way of protecting their bottom line. This is the cost of establishing, or rebuilding, your credit score. If you’re smart you only have to ‘pay to play’ once. After this initiation into the world of credit you’ll have your shiny new fico score to get you low fees and interest rates on anything you borrow.

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