Types of Poor Credit Credit Cards

When someone with a poor credit history wants a credit card, there are a few options available to them. Poor credit cards are meant for these people. There are a few variations of credit cards available to those whose credit rating doesn’t allow them to qualify for a premium card.

The most well-known kind of poor credit credit card is a secured card. This is not usually a good deal. It basically requires the person to put their own money onto the account in advance, and then draws from that money whenever the user makes a purchase. These cards have been around for decades, but in today’s terms, they work a lot like a debit card. The difference is that there are often fees attached. Application fees, setup fees, “rush processing” fees, and more can combine to make a secured card the method of last resort for establishing or restoring your credit rating.

Unsecured credit cards for poor credit are also available. These are not too hard to get in an average economy, although the market may be a bit tighter lately due to the worldwide economic woes. There are companies, like Capital One, which specialize in issuing cards to “high risk” borrowers. Since people with poor credit are their target market, they will usually send one out to an applicant, even if they only put $300 worth of credit on it. They may even send them out just a few months after a bankruptcy has been discharged.

Unsecured cards aimed at nonprime borrowers make their money from a combination of high interest rates and fees collected if payments are late or if the card goes over its credit limit. These are, at least, real credit cards. It is possible to avoid all the fees by being very responsible with the use of these credit cards. Even the high interest can be effectively avoided if you are able to pay off the full balance each month, although this is unlikely to happen for those with poor credit. When a person’s credit rating does improve, cutting up these cards in favor of cards with lower interest rates is highly recommended.