Bad Credit Credit Cards Can Reestablish Your Credit Rating
07.23.09
Millions of people unexpectedly found themselves without jobs during the economic collapse of 2008 and 2009, due to circumstances totally beyond their control. As a result, they were unable to make monthly payments on their mortgages, loans, and credit cards. As a result, the number of people filing for bankruptcy protection rose. People who had the power to purchase almost anything they wanted just a few months before were powerless to do anything but sit back and watch their good credit rating slip away.
Historically, one of the repercussions of bankruptcy has been that the debtor would be unable to obtain credit for at least seven years after filing for protection, rendering major purchases such as applicances and cars impossible. For those who want to get back on their feet and reestablish their good credit rating, there now are secured, or bad credit credit cards to help them on their way. However, bad credit credit cards are not intended to fuel an irresponsible lifestyle.
Bad credit credit cards require an upfront deposit and allow a very low credit limit to start. By using the card to make small purchases, an individual can pay the balance off monthly and gradually build their credit rating back up. Then, once a good payment history is established, the lender may gradually increase the credit limit and eventually switch the customer to an unsecured card.
At first glance, bad credit credit cards may seem like the perfect answer, but there is a downside. Certain lenders may charge outrageous fees in the first billing statement that drain the credit limit dry. They will also frequently charge high interest rates that can themselves eat up the credit limit and generate over limit fees and charge interest from the moment of purchase, rather than allowing the usual one month grace period.
Bad credit credit cards can be invaluable to rebuilding your credit rating, providing you do your homework ahead of time. Just be sure, whichever card you choose, that the company reports to all the major consumer credit bureaus. If not, all your careful actions will see no result. Also remember that bad credit credit cards are only a tool to help you get back on your feet and not a permanent solution. You are on your way to a fresh start if you can find a card company that reports to the major credit bureaus, charges reasonable initiation fees and interest rates and offers a grace period for interest on your purchases.
Great stuff. Very helpful information here.
One shocking statistic from that report shows that about 12 million consumers are still in debt from holiday shopping from the previous year. An increase in available credit the past decade has made it very easy for consumers to have multiple cards and has lured many into spending beyond their means. Given the recent credit crisis, there is a trend in banks requiring higher minimum payments for balances on credit cards. Some consumers that are financially strapped in the current economy are relying on credit cards rather than loans. Though practical, credit cards can easily contribute to debt, if not used responsibly.
This post was awesome. This was helpful stuff.
Simply great.
Explain to the customer service representative that you have better offers and are considering switching. Frequently, the representative will be able to drop your interest rate, or will be able to offer you other perks. (If the first person you speak to can’t help you, thank them politely, hang up, and call back later. Another customer service representative may know of a loophole in the regulations, may have leeway to cut you a better deal, or may simply be more willing to go the extra mile for you. ) In the worst case scenario, the credit card company cannot lower your rates, so you simply go on paying them as before and find a better card to switch to.
Keep the posts coming dude. Like the blog.
Totally cool. I could have used this information a while a go.