What is a “Atrocious Credit” Credit Card?” For anyone who’s received those tempting credit card offers in the mail, or spent any amount of time on the internet, the term “unsuitable credit” credit card isn’t new. Many people, however, don’t fully understand exactly what these are, or how they work.
No one in their right mind would want to lend a decent amount of money to someone with bad credit, right? So then how does it work? Credit cards for mediocre credit are meant to help the borrower “fix” their credit rating. For some people, these cards are also simple practice, teaching them how to better control their money and spending habits. Often times, “hopeless credit” credit cards are known as secured credit cards. While the lender does make it possible for those with dreadful credit history to borrow from them, they also need to protect their investment. Therefore, these cards often require the borrower to either place a deposit equal to the amount they want to borrow, or they require some form of collateral.
So, isn’t it just like a debit card or bank account, then? Essentially, yes. However, the main difference between “tough credit” credit cards and bank accounts is whether or not they report to the three major credit agencies. These credit cards for hopeless credit are specifically designed with this in mind. These companies know the only reason a customer would choose them over a bank account is because they are trying to improve their credit score. Finding credit cards for terrible credit sounds like it might be an easy task, considering how often you see the advertisements for such cards. Sadly, that isn’t the case. While there are many options available to the consumer, there are four key points to take a close look at before making your decision.
First, and most obvious, is the interest rate. How much is each company going to charge you, to spend what is technically your own money? Surprisingly, the interest rates can be pretty high. Try looking for one that offers interest free on purchases that you pay in full within one billing period, aka around 30 days. The next thing to pay attention to is the difference between how much you are required to keep in the account, and how much your spending limit is. Often times, your spending limit is going to be less than the amount of deposit or collateral that you’re required to put in. Some credit cards for bad credit also offer to pay interest on your collateral or deposit. If you can find one of them, that’s obviously a bonus! Last, be careful not to choose a card that requires too much money up front. If you have to put in $500, but are only allowed to spend $250, then you have tied up $250 for however long you have the card open. Hopeless credit credit cards can be a huge convenience to some consumers.
Often times, those with severe credit have used these cards to drastically improve their credit rating, until they were able to open a regular credit card. Just be careful when you choose which company to go through. Always do your research, and whenever possible (and practical) try to go through a large , well-known company.