The task of comparing and selecting the best credit card can be a daunting endeavor for many consumers. The recent credit crisis and economic recovery has resulted in stricter standards from lenders and a more conservative consumer. To avoid debt, credit card users must pay close attention to spending as well as the terms associated with the account. For consumers with good credit history, the number of credit cards from which to choose is vast. Unfortunately, those with poor credit do not have the same options. Credit card companies are reluctant to take on individuals with past credit problems as this can be an indication of future defaults. The credit card companies that cater to those with poor credit history do so at a high cost to the card holder. To improve credit, consumers with poor credit must carefully choose a credit card that will be easily managed at an affordable cost.
Because consumers with poor credit have fewer options available in terms of credit card offers, a side-by-side comparison is often the best way to choose the right card. Credit card accounts for consumers with bad credit share common features which applicants should become familiar with before making a decision. Individuals who qualify for unsecured credit card accounts must pay close attention to the interest rate and any fees associated with the account. An unsecured credit card does not require a deposit, therefore the lender is taking a larger risk of default. As a result, interest rates on these cards are the highest seen. In addition to high interest rates, consumers with bad credit can anticipate offers with annual fees and other expenses that may not be common with a “good” credit credit card. These areas must be compared carefully to avoid damaging credit further.
Bad credit consumers may be not be eligible for unsecured credit card accounts, which limits the options even more. Secured credit cards are sometimes referred to as “pre-paid” credit cards due to the fact they require a deposit from the borrower. The deposit is used as collateral in the event the borrower defaults on the account. This type of card is frequently offered to bad credit consumers or individuals lacking credit history. Unlike the unsecured credit card, pre-paid cards offer little risk to the lender, therefore the interest rates and terms are generally more favorable. The drawback of secured credit card accounts lies in additional fees that are applied to the account upon approval. Set-up fees, maintenance fees, annual fees and other initial costs can reduce the “credit” available for use by the card holder.
With so many factors to take into consideration, it is easy to see how applicants can benefit by a side-by-side comparison. This is most easily accomplished by shopping for credit cards online where many websites provide all important terms and conditions in an easy to read format. By doing so, consumers with bad credit can quickly determine which account is most affordable.
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