Credit Issuers Court Subprime Borrowers
Ever since the economic crash of 2008, banks have tightened their lending standards, leading to less available credit for Americans. But now, with the uptick of the economy, more and more people who could not be approved for loans and credit cards are finding themselves able to secure the lines of credit they need.
More favorable interest rates and more available credit is good news for people with no or limited credit. These are folks the banks call “subprime” borrowers—those with credit scores in the 600 and less range. This can be because of defaulting on a loan, carrying too heavy of a debt load, or even because they’ve never had a credit card and didn’t establish any credit history.
Subprime sees its prime time
These subprime borrowers are now awash in offers for credit cards, say financial news experts. Consumers who may not have been able to get a credit card five years ago now have their pick of cards. One caveat, however: the cards may not come with as favorable of terms as cards for people with good or excellent credit.
Credit card experts say that the most common thing for people to watch for in a credit card for no or limited credit is a high interest rate. If you’re getting a card meant for people with poor credit, it’s likely to have a low limit and a steep annual percentage rate. However, that isn’t necessarily a bad thing.
Paying on time avoids interest
The key to avoiding those high interest rates is to pay the full amount due each month by the due date. This way, you won’t be charged interest, say financial advisors. So a high interest rate doesn’t necessarily cost you money in the long run.
One thing to be aware of is the fee schedule of a credit card. Although banks are now offering lines of credit to people with low credit scores, they might charge higher penalty fees, annual fees, and other fees for having and using the card. It’s important to be aware of what those fees are, and how to avoid them.
Building credit through using credit
One good thing about the more widespread availability of credit, financial advisors say, is that folks with poor credit will have the chance to improve their credit scores through responsible use. Without having a credit card, it’s hard to raise your credit score. So the improved economy may lead to improved credit scores for many consumers, as well.
Latest No / Limited Credit Card News
So far, no one can say for sure when the coronavirus pandemic will end. To assess the current financial situation of Americans, CreditCards.com has recently conducted two surveys of credit card debt during the COVID-19 outbreak. The surveys were conducted in March and April with over 2,000 U.S. adult respondents. Here are the key findings: […]
A recent CreditCards.com poll showed that 6 million or 8% of parents in the U.S. have at least one child using a credit card. Of course, children can’t apply for their own credit card until they turn at least 18, but most issuers allow to add them to their parents’ card accounts as authorized users.
The wedding season is coming up—meaning brides and grooms-to-be are busy tasting wedding cakes, refining guest lists, and booking photographers. But there’s something else they should add to their to-do list, financial advisors warn.
Webbank, a state-chartered industrial bank headquartered in Salt Lake City, Utah, has just introduced the enhanced cash back for its Petal® Visa® Credit Card. Starting December 19, all Petal cardholders who use the Petal mobile app can notice new special offers. These deals are supposed to give cardmembers access to up to 10% cash back with eligible merchants […]
They say knowledge is power. And in the case of credit scores, it seems to be true.
A recent survey by the Consumer Federation of America (CFA) and VantageScore Solutions, LLC, found that people who had recently gained access to their credit score knew more about how credit scores are calculated than those who are unaware of their scores.