Bad Credit? You Can Still Carry a Credit Card

iStock_000006628486XSmallCredit cards have become almost necessary to our way of life now. They’re essential for everything from purchasing gasoline when the station is closed, to shopping on line, to paying for an emergency trip to the dentist.

But if you’ve gotten into financial difficulties that sent your credit scores to the basement, you may think your only choices are a pre-paid card or a secured credit card.

Not so. Several companies offer “Bad credit credit cards.”

When these were first introduced, many referred to them as “fee harvester” cards, because the fees associated with getting and using them could amount to as much as 75% of the credit line issued. There were fees for making application, fees for activation, annual fees, monthly fees, fees for every transaction, and more.

But the CARD Act took care of that. Under the new regulations, card issuers can charge only up to 25% of the credit line in fees during the first year.

In addition, card issuers began to see the opportunity in serving the thousands of Americans whose credit scores have fallen victim to the economic crisis. As a result, the forces of competition took over.

Now consumers can choose from an array of credit cards for bad credit, many of which offer rates and terms that are similar to cards for consumers with better credit scores. Before choosing one of these credit cards, do the research and find the card with the least cost to you. There can be wide differences.

For instance, Orchard Bank offers a card with a zero percent introductory rate, changing to 14.9% after about 6 months. The annual fee is $39. Credit One Visa® offers a card with 23.9% interest, an enrollment fee of $69, and a $69 annual fee. **

Both of these cards carry the standard fees for balance transfers and ATM withdrawals, and penalty fees for late or over limit charges.

The credit line you’ll be offered will depend upon just how low those scores are. In some cases, the credit line offered could be as low as $200.

But if your goal is to rebuild your credit, it could be worth your effort and expense to carry the card. By charging less than $60 on a $200 limit credit card, then paying off the balance before you use it again, you will begin to see your credit scores inching upward.

** Rates as found stated on line as of April 2010

Author:Mike Clover


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Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.