If your credit rating has taken a nosedive, you may no longer qualify for traditional unsecured credit cards. That’s why bad credit credit cards are so popular!
Despite the name, bad credit credit cards are not a punishment.Instead, they come with specific rules and guidelines so that you can get the plastic purchasing power you need –like what you need to book a plane ticket, rent a car, or spend the night in a hotel – without forcing a credit card company to take too much risk on having you for a client.That way, everybody wins!
But are these cards really as powerful as traditional unsecured credit cards?
Absolutely!
In fact, when you get a bad credit credit card, you get to take advantage of many of the same perks as people with traditional credit cards, like:
1.Prepaid purchases
In many cases, the temptation of having a credit card is enough to get into trouble.Sometimes, getting a credit card with a firm limit can be enough to keep you out of debt.With a prepaid debit card, you can do just that!Most of the bad credit credit cards out there are actually a prepaid debit card.Before you can buy anything, you have to deposit money onto the card.You can use them to buy whatever you want, as long as you have enough prepaid funds to cover the cost.
By being able to make prepaid purchases, you don’t have to worry about racking up debt, mounting interest charges, or any of the temptations that come with an unsecured credit card.For the credit card company, these transactions are worry-free because they don’t have to worry about you not being able to pay them back.
2.Freebies
A rewards credit card doesn’t have to come in the form of a traditional, unsecured credit card.Even if your credit is less than perfect, you can get a bad credit rewards credit card that offers you things like airline miles and cash back.That way, you can get many of the same perks that your higher credit rating counterparts do.
3.Guaranteed approval loans
When you have bad credit, asking for a loan can feel like you’re stepping into the lion’s den.However, if you already have a good relationship with a company that offers bad credit credit cards, you may also qualify for guaranteed approval loans.The key, though, is to work with a credit card company that handles both.Otherwise, you’ll wind up back where you started–struggling to get the help you need.
Richard A. Manfredi has written about www.mycredittree.com.Receive credit cards for bad credit and bad credit credit card rebuilding advice.My Credit Tree helps individuals get bad credit credit cards, personal loans, auto loans and credit scores.
I have roughly 5 -10k in bad credit card debt. I was wondering if I pay them off, will I get my cards back ?
Its been over a year since Ive been able to make any type of payment on them. Also, they all been turned into collection agencies. I know I will have to build up my credit again. I was just wondering if the cards I have will be turned back on again, or will I have to start fresh ? Also, lets say I was able to pay off all my bad debt tomorrow, will my credit report be cleared of all the bad things ?
Answer
Creditors can either enlist collection agencies to recover debt on their behalf, or they can sell your debt to the collection agency. If it is the latter, then the account is closed. If it is the former, the account is probably “active”, but there may be a block on it. For example, when I worked in the library, we used an outside collection agency to collect on library fines over $50. The library card is blocked. Only until they pay off their balance will we allow them to use the card again. (The books are assets of the City….a library card is like a credit card in which you’re borrowing property.)
Your credit report will show that your collection accounts have been closed. They’ll still show up on your credit report, so your credit will be ruined until you are able to repair it (through time and more responsible care of your credit).
Even if your accounts are still active, you will be paying high interest rates because you defaulted, which allows them to charge the regular rate. You might want to start anew, so that you have a better interest rate and your limit will be much lower, allowing you to maintain control of your credit.