Credit Cards for Bad Credit – 7 MUST KNOW tips
Mike Gracia
April 30, 2008
A bad credit history is no laughing matter - However, these days it is no reason for shame either. The amount of bad debt in the UK is growing and growing and an ever higher percentage of the population experience credit issues at some point or another, even if it´s not their fault!
Whatever the reason for bad debt, next to clearing that debt, the single biggest improvement that can be made to your credit file is usually to get more credit, and to keep in the green with that credit.
Most credit cards for bad credit do tend to have a much higher APR than usual. In the UK, the average credit card has an approximate rate of 17.73%, compared to bad credit credit cards, which tend to have rates of closer to 30%.
Please do bear in mind that having a bad credit may well mean that an offer of instant decision credit cards may not count for you, as most of these offers are "subject to status"
The higher rate of interest could almost be thought of as a cost involved in improving your credit rating, as providing you do keep up with the payments, you will undoubtedly be considered as a much better credit risk in the future.
That said, if used wisely then you may not actually have to suffer the sting the higher APR would normally bring. Make sure you clear the balance at the end of each month, and you should be able to steer well clear of the excessive fees. If, however, you cannot manage to clear the whole balance every month then at least try to pay more than the minimum payment. Paying just the minimum monthly requirement is perhaps the most costly way to manage you credit card bill (short of running up late payment fees of course!)
Keep a close eye on your credit score, and as soon as you are able, get a standard card with a better rate. Maybe even an interest free credit card offer. Be sure not to apply for too many cards too often though, as this may be looked dimly on by the credit reference agencies.
Remember that if you use your credit card for cash withdrawals, then you may be charged an even higher rate than the standard purchase APR.
If you are really bad at managing your money, and are worried about getting into more debt, then consider one of the pre paid credit cards that are available these days.
Whatever the reason for bad debt, next to clearing that debt, the single biggest improvement that can be made to your credit file is usually to get more credit, and to keep in the green with that credit.
Most credit cards for bad credit do tend to have a much higher APR than usual. In the UK, the average credit card has an approximate rate of 17.73%, compared to bad credit credit cards, which tend to have rates of closer to 30%.
Please do bear in mind that having a bad credit may well mean that an offer of instant decision credit cards may not count for you, as most of these offers are "subject to status"
The higher rate of interest could almost be thought of as a cost involved in improving your credit rating, as providing you do keep up with the payments, you will undoubtedly be considered as a much better credit risk in the future.
That said, if used wisely then you may not actually have to suffer the sting the higher APR would normally bring. Make sure you clear the balance at the end of each month, and you should be able to steer well clear of the excessive fees. If, however, you cannot manage to clear the whole balance every month then at least try to pay more than the minimum payment. Paying just the minimum monthly requirement is perhaps the most costly way to manage you credit card bill (short of running up late payment fees of course!)
Keep a close eye on your credit score, and as soon as you are able, get a standard card with a better rate. Maybe even an interest free credit card offer. Be sure not to apply for too many cards too often though, as this may be looked dimly on by the credit reference agencies.
Remember that if you use your credit card for cash withdrawals, then you may be charged an even higher rate than the standard purchase APR.
If you are really bad at managing your money, and are worried about getting into more debt, then consider one of the pre paid credit cards that are available these days.
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