Because of recent economic problems worldwide, people who would once have been considered to have excellent credit now have a mediocre rating. Those that used to have mediocre ratings now have poor to horrible ratings. These people still need to have access to credit for emergencies and expenses that come up unexpectedly. However, they should know the truth about horrible credit credit cards.
The first thing they should know is that such cards are available. In extreme cases, they may be asked to put up a security deposit before a card will be issued. However, it is possible to get unsecured accounts from many lenders.
The fees for such cards are often extremely high. These can include a one time set up fee, a special maintenance fee, a special program fee, and an annual fee that is broken down and charged monthly. Initial limits on these accounts are usually pretty low, making the amount of available credit much lower than the limit. This is because all these fees are charged to the account up front.
Interest rates are also quite high. Some lenders offer an initial interest rate that is reasonably low but with the provision that the rate rises drastically in the event of one late payment. Others charge extreme rates from the very beginning.
Minimum monthly payments are set up to be affordable. However, the interest rates on these accounts are normally high enough that making the minimum payment each month does not even cover the full interest charge if the account is near its maximum limit. This means that even making minimum monthly payments, one is losing ground and sliding deeper into debt. That is why it is best to pay off as much of the balance each month as physically possible.
There are some lenders that specialize in nothing but bad credit credit cards. However, there are many that offer preferred programs for those with good ratings and less user friendly accounts for those with not so good ratings. It is a good idea to shop around to try and find the best deal one can secure in terms of fees and interest rates.
Owning a card does not mean that one needs to carry a balance each month. In fact, it is best to minimize the use of the card and pay it off completely. However, owning a card and not using it at all can be more harmful to one’s credit score than not having one at all. This is because inactive accounts reflect negatively on a person’s credit worthiness.
Everyone needs to have at least one major credit card that can be used in emergencies or to cover unexpected expenses. People with poor credit ratings can have a more difficult time getting one. However, credit credit cards for horrible credit do exist and can be had if one is willing to pay the high fees that such special programs usually entail and the extra high interest rates lenders tend to charge for those with less than perfect ratings.
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