The Credit Card Solution If You Have Bad Credit

by : Anthony Samuel

People who have run into some bad luck financially or who have a lot of outstanding debts can expect to have a hard time when it comes to getting a new credit card. If previous unsecured loans have gone unpaid and incurred late charges or other fees, or if an individual has had to apply for debt relief in the form of counseling or loans, it is likely that a negative credit score will appear on any type of new credit card application.

There are credit cards known as bad credit credit cards that are now available to people who do not have a spotless credit history. This type of credit card is appealing to those who have bad credit as it offers several options to avoid embarrassing incidents during the application process.

The first enticement is that when applying for bad credit credit cards, people are generally not subjected to a credit check. Usually companies offering credit cards for people with bad credit are so sure that they can approve any applicant, that in many cases they offer a double cash back refund in case the application is turned down; that is, they pay the applicant double the processing fee. These companies, in many cases, also offer cash rebate for referrals to their program, which can help card holders pay off their debts.

It is important to note that with this type of credit card, designed for people who have already hurt their credit, there are going to be a lot of fine print issues that must be gone over. The card company recognizes that there is a certain risk in extending credit to individuals who have a history of not making their payments, thus there are more stringent requirements with these types of cards than there would be with a normal card.

The first thing to realize is that there is usually no introductory period. Usually, cardholders would have a time period after receiving their new card during which they would not have to pay interest rates. With bad credit cards however, there is no introductory rate. New cardholders can expect to pay higher that normal APR's immediately upon activation and usage. There is also normally an annual fee for the usage of these cards.

Next, individual applicants must realize that bad credit credit cards begin charging interest on purchases the day the purchase is made; there is usually no grace period. This interest is charged daily, in contrast to standard cards which calculate the interest on a cyclical billing period, which is usually monthly. Sometimes there are also restrictions on applications for these cards according to the state of residence of the individual.

Although there are some stricter measures that have to be observed with credit cards for people with bad credit, the fact remains that these are cards designed with people with a bad credit history in mind. Most cards will not approve applications for individuals with this type of history, which can lead to an obstacle that is difficult to overcome; without a card, rebuilding credit is almost impossible. Although some of the rates are higher than other cards, these types of credit cards will still allow individual users to rebuild their credit when using it.