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Credit Cards for Bad Credit
Consumers with bad credit can still get credit cards, but it does cost a little more.
These cards may be reasonably priced, or may be the “fee harvester” cards that consumers should avoid.
Prior to the CARD Act, a card with a $300 limit might arrive at a customer's mailbox already loaded with $279 or more in fees, including application fees, annual fees, monthly fees, etc.
Now that the CARD Act is in effect, lenders are restricted to a combined total of 25% of the credit line in up-front fees, which means that card would arrive with only $75 in charges before being used by the consumer.
In response to these limits, subprime lenders have hiked interest rates – some charging as much as 79%. (Yes, seventy-nine.) Others have applied a variety of transaction fees, making “fee harvester” cards very expensive to use.
While consumers must now opt-in before they can go over limit on their credit lines, the fees when they do go over limit can be as high as $49. Consumers who wish to avoid overlimit fees should be wary, as the opt-in may be pre-selected on application forms. The good news is that card issuers are no longer allowed to “double dip” – charging an overlimit fee for incurring the original overlimit fee.
Other credit card issuers are more reasonable – charging an annual fee of about $59 and an interest rate of 14.99%. Some are even offering zero percent introductory rates.
Consumers with bad credit who need to carry a credit card can now shop around for the best rates.
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