In the past money was tight, tough choices had to be made and bills were often neglected for long stretches of time. Because of your past behavior, you now have a dismal credit score and are having difficulty qualifying for any type of lines of credit. You are considering securing a credit card for those with a history of bad credit, but there are some risks associated with those types of cards you need to be aware of.
The costs associated with securing a credit card for those who are considered “subprime borrowers” can be staggering, as many companies will prey on those who are considered weak. Consumerist.com provides the stats for one such credit card, courtesy of Continental Finance MasterCard:
- Account setup fee: $99
- Program participation fee: $89
- Annual fee: $49
- Account maintenance fee: $120 (charged @ $10/month)
- Purchase APR: 19.92%
- Authorized user fee: $30 (great! seems like $53 credit is a bit too much for a single person to handle)
- Credit limit increase fee: $25 (and you don’t even have to ask for it!)
- Internet payment fee: $4 for each authorized Internet payment
Please take additional caution that if you open this type of card to improve your credit score; canceling it can actually have the reverse affect.
If your only option is a bad credit credit card, proceed with caution. Read the terms carefully, make all payments in a timely fashion and do not cancel the card prematurely. By paying for the “luxury” of having this type of credit card, you can use it as an effective tool for rebuilding your credit history and subsequently raising your credit score. Just make sure you know all the terms of your bad credit credit card arrangement so you do not end up further in debt and prevent any further damage from occurring to your credit score.