Bad Credit Credit Cards: How to Use Them

by : Edward Vegliante

If you've had trouble with credit in the past, it can be difficult to find lenders who will issue you more credit. This is not the case with bad credit credit cards. These cards are specifically designed for those who need to rebuild their credit rating. If you make the right moves, a bad credit credit card can be your ticket out of credit problems. Here's how.

Select a Bad Credit Credit Card

Many credit card websites dedicate a specific section to bad credit credit cards. While all of these cards are made for those with a low credit score, their features and fees vary greatly. Before applying, look carefully through your options. Note the start-up and annual fees that come with the card. Also check the interest rate. Credit limits differ from card to card. Some cards, called secured cards, require you to set up an account and make a deposit before using the card. Others are unsecured, meaning you do not have to put money in an account before swiping the card. Weigh your different options, and choose the card that will help you get your credit back.

Spend Wisely

Once you have the bad credit credit card in your wallet, don't use it for every purchase. Plan out how you will use the card. Consider making a small purchase, such as filling up for gas or grabbing lunch. After you use the card once, pay off the balance. Then use it for another item. Make smart purchases that you can pay off in just a month. Then make sure that your payments are made on time. Do not max out the credit card.

Establish Good Credit

Many bad credit credit cards report to major credit bureaus each month. This means that if you are paying your bills on time, others will notice. As the months go by, your wise use of credit will be reflected in your credit report.

In addition to paying bills on time, keep just one credit card account if possible. It will be easier to maintain, and will help your credit score increase quickly. To check your progress, you can request a free credit report once a year.

Think Long-Term Some items on your credit report will be there for a long time. If you have filed for bankruptcy, for example, it can stay on your report for ten years. Don't let the timeframes get you down. By consistently making on-time payments and staying within your credit limits, you will see a change in your credit score.

As your credit rating inches up, you'll be able to apply for a regular credit card. These usually include more benefits than bad credit credit cards, and sometimes have a lower interest rate. Continue to use the new card like the bad credit credit card. Do not spend more than you can pay off quickly. Eventually, you will be ready to apply for more forms of credit.

Your bad credit credit card may seem more expensive than others. And it some ways, it is. But it is also your first step toward better credit. As you make on-time payments and stay within the credit limits, you'll learn to manage credit better. This will help you make smart financial choices in the future.