Credit card

Credit Cards for Bad Credit

Your financial health is an important aspect that banks and credit card companies would look into if you are applying for a credit card. If your credit score is in the 700s, then you’re most likely to get approved, but if your credit standing is in the range of 500s-650s your chances of getting approved are reduced.

It’s a mandatory process for banks and credit card companies to check your credit card eligibility, as this gives them a heads up on whether they’d be able to get back the investment they’ve made.

But this was before. Today’s scenario has changed a lot. With the emergence of new financial institutions online, it has become possible to get credit cards even with a bad credit history. Bad credit credit cards, as they are popularly called, have become an excellent alternative for when you have bad credit or no credit history at all.

Credit Cards for People With Bad Credit

Bad credit credit cards are basically like your regular credit cards, and they come in several types. There are those that are designed particularly for bad borrowers, or for people with bad credit, and those designed particularly for people with limited or no credit history.

There are also secured credit cards, which require you to submit an application form along with a down payment. That is, you will need to deposit a certain minimum amount to get approved for a credit limit that starts from around $200 to $300.

There are also unsecured credit cards, which do not require a down payment but carry a pretty high interest rate along with steep penalties for late or missed payments.

Also, although bad credit credit cards entail additional requirements, the application process is the same as you would with a regular credit card. You only need to fill up an application form that asks you a few simple and basic questions.

Some important details you may be asked are employment information, proof of residence, social security number, and credit history. Remember though that because these cards are designed for people with poor credit or no credit history, the application form does not contain a hard inquiry on your current credit standing.

The initial credit limit for credit cards for people with bad credit is generally below $500. And while this is so, some credit card companies offer a clear path to increase your credit limit, which can be done by diligently paying your balance and staying current on your account.

Credit cards for people with bad credit history are popular these days. Just go online and you’ll see several companies offering good values. The competition makes the application process faster and you can get your credit card delivered in a couple of days.

Benefits

These days, there are many ways to borrow money even if you have poor credit history, from getting peer-to-peer loan and applying to credit union, to using a home equity line of credit. However, credit cards for bad credit have become the easiest and quickest way to borrow.

The biggest advantage you can get from a credit card for people with bad credit is that it has become an excellent financial tool to build or improve your credit history. It’s a given fact that until you improve your credit rating, you will be viewed as a high-risk borrower not capable of paying back the money owed. But a bad credit credit card is an excellent way of building or rebuilding your credit history.

The secret is to making payment on time and ensuring your balance remains low relative to your credit limit. Once you’ve earned a good reputation from paying off every month on time, you do not only improve your credit standing, but you can also apply for a better card with lower annual percentage rate.

Tips

All the information mentioned earlier might give you bad or negative impression about credit cards for bad credit due to high fees and charges associated with them. While they are all given facts, remember that it is possible to find a financial company that will give you a good and reasonable deal with low interest rates and fees. It’s always wise to compare and contrast different companies in order to find the best value, that is a credit card with the lowest annual percentage rate and penalty terms.

When you’ve found a good company, make sure to carefully read the terms and conditions before signing a contract. Remember that some lenders may have hidden charges and even policies that you may find unfavorable. Make sure to clarify such issues with them before going any further. Read reviews and find out whether the credit card company you’re eyeing on is a good and reputable lender.

Remember also that your responsibility as a borrower, or a credit card holder, doesn’t stop once you’ve found a good credit card company. You also need to make sure you pay off your balance each month, in full as much as possible. Don’t settle for paying just the minimum amount or you’ll soon find yourself deeper in debt than ever before.

Also, if possible, pay in advance rather than wait for when the payment is due. Doing all these will give your lender a good impression of you which will be very helpful in the future and which will certainly improve your credit standing.

Importantly, you need to make sure your credit card company reports relevant information, that is your credit card payments, to credit bureaus. Otherwise, the hard work you are doing to build or rebuild your credit history will all go to waste if your credit card company is not reputable enough to help you improve your credit standing.

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Sears Credit Card

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Sears card come in two holder choices – one is the store credit card and the other is the Sears MasterCard. For this article, we will focus on Sears card as it can be used at any Sears store or affiliates such as Lands End, the Great Indoors, and K-Mart to name a few. At the same time, Sears credit card has both the special savings offer from Sears and flexibility of MasterCard. With these advantage, however, there are certain drawbacks that you may want to consider first.

Pros of Sears Credit Card

Sears credit card offers a reward system based points. With each purchase, you gain bonus points that will accumulate until such time that you can redeem them for rewards. The bonus points are handy for items like Sears merchandise, airline tickets, and restaurant gift cards.

Another good thing about this card is its convenience as far as billing is concerned. You can do both paperless billing and online bill payment with ease. At the same time, you have the option to add users to your account without paying additional fees or charges.

Opting for this card also entitles you to receive monthly savings and special finance offers. You also get notifications through your email for sales and special events. This is highly useful for people who wish to get the latest information on Black Friday finds and holiday shopping.

When it comes to fees and charges, Sears card offers account protection with no cost in liability on unauthorized purchases. There is also no need to pay annual fees or interest rates on purchases that are paid within 12 months. More importantly, your account is protected by Citibank’s Citi Identity Theft Solutions. This is why if you are a loyal customer of Sears, purchasing this card is a good way to save additional cash.

Cons of Sears Credit Card

One of the biggest disadvantages of a Sears credit card is that it has higher interest rate compared to other credit cards. With roughly 25% APR, you may want to reconsider checking other cheaper options. In addition, it will take a long time before you can redeem your rewards with their point program since you have to acquire more than 1000 points first.

On top of this, if you go through the listed benefits of the card, you will notice that there really is nothing extraordinary about the Sears credit card. In fact, the benefits that they offer are also provided by other credit card companies that offer cheaper interest rates.

So Is It Worth It?

There are a few benefits with Sears credit card, but whether or not it is worth the cost is a big factor to consider. Despite the advantages that they offer, the high interest rate is not worth the simple benefits that the company offers in return.

In this case, it is highly recommended for you to check other credit card options and see for yourself how cheap the alternatives are. At the same time, compare the rewards and notice how you will get more in return from other companies compared to what Sears has to offer.

Best Buy Credit Card

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Best Buy is a premium go-to store for home electronic needs. Whether you need a new HDTV, home theater and other forms of gadgetry, you’ll certainly find a slew of wonderful choices from this store.

Best Buy also offers a store-brand credit card and Visa card. Both cards are accepted at any Best Buy stores, but you can use the Best Buy Visa card anywhere a visa credit card is accepted. If you frequent a Best Buy store often, you might consider getting one of these credit cards. However, there’s more to Best Buy cards that you need to look into before making a qualified decision.

How Does a Best Buy Credit Card Work?

Getting one of the Best Buy credit cards entitles you to promos and discounts which are not available to non-card holders. You simply need to sign up for a credit card at the store and gain 10% in rewards from your initial purchase. After which, a variable APR of 25.24% shall be applied to your subsequent purchases.

You will accumulate points each time you use the Best Buy credit card in your purchases, but you can only redeem your rewards from the Best Buy store. You need to use the credit card responsibly or rack up $38 in both late fees and returned payment fees.

Types of Best Buy Credit Cards

Best Buy offers two types of credit cards. The first one is the My Best Buy Credit Card which you can only use in making purchases at Best Buy Stores. The second version is the Best Buy Visa Card. You can use this card outside Best Buy stores where Visa is accepted.

The Visa card is further categorized into two types: the Visa Gold and Visa Platinum. Visa Gold has an annual fee of $59 while Platinum has no annual fee.

Benefits

Generous rewards. Both types of Best Buy credit cards provide generous rewards of 2.5 points for each dollar in your purchase. You can then redeem the rewards from any Best Buy store. Rewards increase as you use your Best Buy card more often in a calendar year. For instance, if you spend $3,500 in a year, your account is upgraded to Elite Plus and rewards increase to 6%.

Financing offers for purchases. Using the credit card, you also have the option to finance some purchases interest-free for a specific time frame. For instance, you can use the card to finance your purchase worth $479 for 18 months with zero interest.

Drawbacks

Deferred interest financing can cost you more. Once the interest-free period is up, you need to pay the interest going back to the very first day of the purchase. This can lead to accumulated interest that makes the purchase even more expensive. Make sure that you don’t go beyond the deferred interest period and make your payments on time to prevent costly consequences.

High interest rate. The variable APR of Best Buy credit cards is 25.24% which is still pretty high for an in-store credit card. Carrying a balance from month to month could trap you into a lengthier payment period and eat up all the points you’ve accumulated.

Are There Better Alternatives?

If you’re a gadget geek and like upgrading your electronics, getting a Best Buy credit card can certainly look enticing. However, there certainly are better credit cards out there that you can use in Best Buy stores and numerous other establishments. It’s best to look at credit cards with better financing options, lower interest rates, no annual fees and other wonderful perks.

JCPenney Credit Card

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Store-brand ones like the JCPenney credit card can aid in financing more expensive items as well as allow you to win points which you can redeem as cash backs. On top of that, you also get an automatic 10% discount on your purchase using the credit card for the first time.

How It Works

The JCPenney card works similarly with any conventional credit card. You get a designated credit limit, interest rate and financing terms for purchases. Instead of paying with cash, you simply need to swipe the card and pay the bill each month.

JCPenney gives you 1 point for every dollar you spend using the card. You also get a $10 reward for spending $100 using the card in a month. You can earn up to ten rewards certificate in a month which you should claim or use within the period, or the rewards will expire.

Types of JCPenney Credit Cards

You start with the basic JCPenney credit card which you can sign up for free and get the automatic 10% off from the cost of your initial purchase with the card.

After spending $500 in a year using your basic JCPenney credit card, your account is upgraded to the Gold credit card. This entitles you to a few extra perks like birthday gift and discounts. Your account is further upgraded to Platinum if you total $1000 in spending a year. The Platinum account entitles you to all benefits from basic and Gold accounts plus free shipping if you shop from the JCPenney’s online store.

Basically, you’ll have to use the credit card often to accumulate the minimal spending required and upgrade your account.

Benefits

Sign-up discount. You can sign up for the credit card at the check-out counter and enjoy the automatic 10% discount on your initial purchase. If you spend $200 during sign up, you get an automatic $20 off from the total cost.

Reward points. JCPenney and its affiliate stores will reward you one point for every one dollar purchase. On top of that, you also get $10 for spending a total of $100. You can use the points as discounts on your next purchases and provide you more savings.

Easy to qualify. You don’t need to have high credit credit score to qualify for the JCPenney credit card. You can just sign up at checkout and get approved. However, terms can vary depending on your credit status.

Drawbacks

Very high interest rate. At 26.99, JCPenney is currently offering a very high interest rate. It’s way above the standard APR for credit cards and it’s even higher than other store credit cards.

It’s a spending temptation. If you’d like to enjoy other premium benefits, you need to increase your spending to upgrade your account. You’ll also need to claim your rewards promptly each month to be able to use them before they expire.

Are There Better Options?

The discounts and perks as you upgrade your JCPenney credit card may seem enticing, but the very high interest rate could defeat all the rewards if you miss a payment. Instead of getting the store credit card, consider looking at regular credit cards that offer better rewards, lower interest rate and a lot more perks.