How to Choose a Credit Card for Bad Credit

There are really two steps involved with credit repair. The first is getting rid of negative information from your credit report. That includes disputing accounts that aren’t yours and paying off old delinquencies. The second step in credit repair is adding positive information to your credit report. This, you can do by making timely payments on credit cards and loan accounts.

If you don’t already have a credit card you can use in credit repair, you’ll have to apply for one. The hard part can sometimes be finding the right one. There are credit cards for nearly every credit situation from good credit to bad credit and even new credit. Not every credit card that’s aimed at people with bad credit is a good credit card for you.

Watch out for subprime credit cards, also known as fee harvester credit cards. In the past, these credit cards were known for adding a ton of fees to a brand new credit card. These fees took up most of the credit card’s already low credit limit even though the cardholder had never made a purchase. Unsuspecting cardholders would try to make a purchase with the credit card, even up going over the credit limit, and face an over-the-limit fee as well as an increased interest rate.

New credit card rules limit initial fees on subprime credit cards to only 25% of the initial credit limit, or $25 in fees for every $100 of credit limit. Unfortunately for credit-troubled consumers, credit card issuers have found a way around the rules. By adding certain fees before the credit card is ever issued, subprime credit card issuers can skirt the credit card rules and continue charging outrageous fees on these credit cards.

Read the credit card disclosure before you apply for a credit card to learn what fees the credit card issuer is charging. Credit card issuers are required to provide the pricing of a credit card, including interest rate and fees, with every credit card offer.

An annual fee between $0 and $50 is normal for credit cards aimed at people with bad credit. Application fees and similar fees aren’t typical. The Capital One Classic Platinum is a good choice for an unsecured credit card that approves people with bad credit scores – between 550 and 640. There’s currently a 0% APR promotion on purchases through May 2011. The annual fee is $39. Approval is still based on your credit and is not guaranteed.

Another good choice is the Orchard Bank Classic MasterCard, which approves credit scores as low as 490. The downside is that the interest rate for purchases can be as high as 28.9%, depending on your credit. There’s also an annual fee up to $79 and a one-time processing fee up to $39. If you’re only approved for Orchard Bank’s secured credit card, you must provide a minimum security deposit of $200.

As you’re searching for a new credit card, pay attention to the fees of any credit card that geared toward borrowers with bad credit. If the initial fees are high, look for another credit card.

Similar Posts:

• A Good Credit Score Gets You The Best Credit Card Deals
• How to Pick a Secured Credit Card for Credit Repair
• Are You Ready for a New Credit Card?
• Rules to Live By During Credit Repair
• Financial Experts Advise Caution with Zero-Percent Balance Transfer Credit Cards