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How Unsecured Credit Cards for People With Bad Credit Can Be Benefit

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					How Unsecured Credit Cards for People With Bad Credit Can Be Benefit

It is pretty difficult to get by in the modern world without having a
credit card, but sometimes we wish we had none. At times, paying our bill
can be a real challenge, and usually it is these plastic cards that are
the root of our financial woes. But if that is the case, why do some
issuers grant unsecured credit cards for people with bad credit? Surely,
this is just asking for trouble.

Issuers have to keep issuing card to keep profits up, and with so many
people suffering from low credit scores, a market for credit cards
designed for the consumer with bad credit has sprung up. And in any case,
getting approval is a viable way for a consumer to rebuild their credit
reputation.

But, there are clear criteria to meet before anyone can hope to get the
thumbs up on their application. What is more, significant compromises
associated with unsecured credit cards also have to be made, with
interest rates and charges usually higher than usual.

Considering the Downside

It is only to be expected that unsecured credit cards for people with bad
credit would come with terms that are far from ideal. Issuers are aware
of the risks involved. Basic steps are to increase interest and lower
credit limits.

Often, the cost of getting approval when bad credit is such a major
factor does seem rather debilitating. For example, typical introductory
offers, like a 0% APR and the first year annual fee, are both dropped.
Sometimes, benefits like purchase points are also affected, while the
interest rate can become extremely high, with some cards charging as much
as 23%.

This certainly does mean that unsecured credit cards are expensive, but
card issuers will also point to the fact that disciplined use of the
cards will see the benefits return over time.

Beating the Charges

Of course, there are ways around the high interest rates associated with
unsecured credit cards for people with bad credit. The most practical one
is to prepay the credit sum, thus changing its status to a secured credit
card. But there are clear benefits to this kind of move.

First and foremost, with the credit card prepaid, it means that the
interest rate charged falls significantly. By all accounts, the card
becomes a debit card, since the limit is set by the amount of money
offered in prepayment - put down $1,000 and the limit is $1,000. The
chances of getting approval, however, are made extremely good.

Once a card is issued, then it gets the bad credit borrower back onboard,
providing them with the chance to get their credit rating in order.
However, prepayment is not always necessary, and if a low limit is
acceptable then it can work in the long run too.

Getting the Best Possible Terms

There is little point in claiming that excellent terms are available
online, but certainly there are better terms to be had there than from
banks and traditional institutions. Getting the best terms on unsecured
credit cards for people with bad credit means spending some time
searching, and accepting compromises.

Remember, that even a half-percentage point in interest can result in
good savings, while a disciplined attitude towards spending means
interest can be kept low anyway. So, getting approval does not have to be
seen negatively.

And in the long-run, keeping on top of a small credit card debt, still
results in improved credit scores. And with improved scores translating
to better loan terms, the investment in even a small unsecured credit
card is worth it.

				
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posted:9/22/2012
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