You Can Still Get An Unsecured Credit Card Even With Bad Credit

By: Jake Jenkins
Submitted: 2007-01-17 16:17:35
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Secured credit cards are the most suitable for people with problems managing credit and I will recommend that option to anyone of such a position. However if you are having serious problems getting hold of a deposit, then you can still obtain an unsecured credit card.

If managed properly, using an unsecured credit card can still help you recover your credit score and improve your credit history. So what makes the secured credit card differ from the unsecured credit card ?

One of the quickest ways to get a credit card when you have bad credit is to opt for a secured credit card. With a secured credit card, you deposit money in a bank designated by the credit card company to serve as a 'security deposit' - an assurance that they'll get their money if you default on payments. Depending on the lender, that deposit might be equal to your desired credit limit, or slightly higher or lower. A security deposit of $300, for instance, might get you a $200 line of credit with one company or a $350 line of credit with another, and a $450.00 one with yet another. The interest rate is generally competitive, since the company has a guarantee of getting its money if you don't make payments Although an unsecured credit card requires no security deposit, it will often have either a high APR, high setup and associated fees, or both.

So how do the you compare methods of securing credit? How do you know which one is better for you ?

To look at a real life example of how much a secured credit card cost. For instance , if you want a credit limit of say $1,000 you will have to put up a collateral of $1,675 and each time you request for an increase of credit limit you will have to pay between $100 - $150 depending on the credit card company. The APR on this will usually be from 14.9% to 16.9 %.

On the other hand, an unsecured credit card will cost you $30.00 to set up, a $48 annual fee. Then you will have to pay a Participation Fee of $84 - this cost is usually spread over the year so you will pay $7 each month. You will also have to pay a one time fee of $95. If you augument your credit limit at any time, you will have to pay $27 for each $100.00 or at the discretion of the credit card provider. All these charges will show on your first credit card statement. It is important to note that after all these charges, the credit limit you actually applied for will not be what you will have available to you.

To conclude, while a bad credit unsecured credit card may cost you more, you will not need to cough up a deposit up front . Both the bad credit unsecured credit card and the secured one can help you on your way to a healthier credit score and credit history as long as you keep the faith and make payments promptly even if it is just the minimum payment. Bear in mind that although the charges are higher, the bad credit unsecured credit card has a lower APR rate at least 4 to 5 % lower. You can take all this into consideration when making a choice.

Article source: Expert Articles

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