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The recession has hurt us in many ways. It has made bills tougher to pay and credit card balances more difficult to keep down. This has brought down credit scores for millions. Unfortunately the recession was caused in part because of over lending, giving lines of credit to people who were not credit worthy through mortgages, credit cards, and other loans. This has made getting a credit card worth having very difficult for many with sub-par credit over the past couple of years. Thankfully it is possible to get a credit card with a bad credit history, you just have to know where to look and what actions to take.
It is important to keep in mind that credit cards for people with a bad credit history are not going to have the best of terms. Instead of paying an APR of 14.5%, the average credit card APR in the industry, you can expect to pay 20%-22%, which is significantly higher. If you run a monthly balance with a credit card at 20% or more you will be in trouble. Interest compounds quickly at 20% and there is a good chance you will get yourself in a situation where you cannot afford your payments down the road which would only make your situation worse. Albert Einstein once said the greatest power in the universe is compound interest, you want compound interest working for you by saving and investing money, not running up high balances with your credit card.
You should be using a credit card to improve your credit situation, not to buy things that you cannot afford. If you cannot afford to buy clothes or electronics today, you will likely not be able to afford the purchase down the road by buying it on credit. If you are serious about improving your credit situation and you pay off your balance in full each month you will notice that your credit score will improve more and more quickly than you would have ever imagined! Remember that a good credit score not only helps you gain access to lines of credit [Mortgages, Auto Loans, Personal loans] it can also help you in terms of employment!
While it is more difficult now than in the past to own a credit card if you have bad credit it is still possible. Here are three credit cards that you should consider applying for if you have a poor credit score:
Orchard Bank Classic MasterCard
This is one of the best and most popular credit cards for people with poor credit. APR rates are variable, but they will be higher than the average APR rate of 14.5%. Depending on which Orchard card you qualify for you will pay an annual fee of 0-75 dollars, it all depends on your credit score and your particular situation. I do not mind recommending this card despite the fee because other fees are non-existent and this is such a good card for building your credit score. This Orchard Bank card reports to all three credit bureaus each month which gives you an excellent opportunity to build your credit score. Orchard Bank is giving you a chance to build your credit score, what more could you ask for?
Capital One Secured MasterCard
The APR on this credit card varies, but you can expect to pay 22.9%, which is steep but common these days. The good news is that this credit card is geared towards people with bad to average credit and the annual fee is just 29 dollars which is about as good of a deal as you will find. This is a secured credit card so you will be faced with completely different rules and guidelines than a normal secured card, but depending on your deposit you can get an initial credit line of up to $3,000 which is very impressive for a bad credit card.
Tribute Gold MasterCard
This is another solid credit card for those of you with bad credit. While this card has high fees and a high APR rate it gives you an opportunity to raise your credit score and become a legitimate credit card owner. The annual fee for the card is $150 and you will have to pay 10 dollars in fees each month for owning the card on top of that. The APR rate is a very steep 24.5%, but you do get a 25 day grace period to work with where you can make purchases without racking up interest which is what you should be aiming for. Your credit limit will be just 300 dollars which is low, but that is what you will have to deal with as a person with bad credit.