Living your life with bad credit can put you in a vulnerable position. As you know, the only way to help improve your credit score is to rebuild your credit. That requires that you have an active line of credit available for you to pay on to help you establish a positive pay history. When you have poor credit, however, the options for credit cards are few and far between.
Credit Cards for Bad Credit
Did you know that there are a handful of companies willing to fork over unsecured lines of credit to people who have a poor or damaged credit history? On the surface, it seems like a smart choice. Someone is willing to give you a second chance, so you might as well take advantage of the opportunity, right?
Heres the problem a majority of these cards are designed to drive you further into debt. Mess up one time and you could find yourself sinking deeper into the hole. You wont do much to rebuild your credit and may actually destroy it instead.
If youve been playing around with the idea that a bad credit card is right for you, think again. To show you how bad it really is, check out the 3 pieces of evidence below that prove that these types of credit cards are downright evil:
#1 Most Cards Come Loaded With a Balance
Imagine this: You just get approved for a credit card for the first time in years. As the credit card arrives in the mail, you quickly rip it open, eager to see a card with your name on it. Looking closely at the details of the card, you notice that there is already a balance on the card. Even worse, your available credit is close to zero.
That is the unfortunate truth about these types of credit cards. Once approved, many companies will initially charge you administrative fees, program fees, annual fees and more. That means youre card comes to you with a high balance before you can even put it to use. For those who have suffered from credit trouble in the past, a card like this will open up a can of worms and push you further in the hole than you were before.
#2 Monthly Maintenance Fees Are High
Just when you thought the initial fees were insane, there are the monthly maintenance fees you will have to endure. A maintenance charge is yet another useless fee that you have to pay to keep your account open. Sprinkle in any interest charges and your minimum payment will barely make a dent in your total balance, taking you years to completely pay it off.
Do you really think its worth making payments heavily on a credit card you cant even use to begin with? It is practically highway robbery at its finest.
#3 Interest Rates Are Through the Roof
Just when you thought things couldnt get any worse, you realize that the interest rate on your new card is astronomical to the tune of 29.99%. That averages out to $29.99 per year on every $100 of that makes up your balance. Thats on top of the monthly maintenance fee and the initial fees you paid out just to get the card!
Most companies have variable interest rates, but rates as high as 29.99% are not uncommon. Its these high fees and outrageous interest rates that keep people locked in, never to escape the tight grip of debt. The only real winners here are the credit card companies.
Dont Fall for the Trap
Getting a credit card for bad credit can be tempting, but it isnt worth the trouble or the risk of going deeper in debt. Instead, focus on a better and more forgiving method to rebuild your credit. You will be glad that you did.
Sam Jones, the author, has been trying to compare credit cards for people with bad credit on uSwitch.com to try and find out what the best advice is for people struggling with credit issues.
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