What credit card options exist for people with bad credit?
Answered on Tuesday, October 12th, 2010 by
James Williams

People with bad credit history require credit cards that are approved without credit checks. Although majority of credit card companies perform credit checks before approving the applications, there are a number of companies that provide no credit check cards. These cards are referred to as bad credit cards, since they are good options for people with bad credit history.

The first thing that comes to mind when applying for bad credit cards is the prepaid card or a secured credit card option. Prepaid card has both advantages and disadvantages of usage. For people with bad credit, paying money upfront might be a difficulty, which is one of the reasons they will look for credit cards. But prepaid credit cards need the user to load the card with some amount before using them. So does the secured credit cards, where the applicant must deposit a specific amount as security, and the credit limit will be the amount deposited. Although these cards are helpful to shop online and make travel bookings and reservations, they are limited to the amount a user can prepay, in order to use the card. Also, prepaid cards don`t come for free; they come with a transaction fee for using the card.

Some credit card companies offer unsecured credit cards which works exactly the same as regular credit cards. The user will be preapproved for a certain amount of credit. The catch here is that the credit card company withholds a certain amount of the preapproved credit limit as a security, and only the remaining amount will be available to the user as a credit limit. These cards work in a way like secured credit cards, but the user need not pay the deposit amount upfront, which makes these cards more desirable than the secured credit cards.

People with bad credit can apply for regular credit cards too. Although credit checks can be avoided, credit card companies charge a very high rate of interest for bad credit history applicants. Also, the available credit limits will be much lower compared to good credit history applicants. Also, the fines, late payment charges and hidden costs will be much higher for bad credit history applicants. Before applying to credit cards, making sure that the company accepts bad credit history applications is mandatory. Any rejection of application can do further harm to credit history and lower the credit scores. Careful comparison of all the options before signing up, can lead to the best decision, and can help recover from a bad credit history.

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