Apply Unsecured Credit Cards for Bad Credit
If you have defaulted on loans or have a history of having problems paying your loans, chances are you have a bad credit score. Believe it or not, this can significantly affect your options especially when it comes to financing. When you want to get a credit card, banks will usually look at your credit score to see if are financially responsible and that you have the ability to give on-time payments. Can you still get a credit card? Yes! You can still apply for unsecured credit cards for bad credit.
Applying for Credit Card
For people with good credit standing, it is not difficult to apply for a credit card. This is exactly the opposite if you have bad credit. When you have poor credit score, you are considered a high-risk borrower. This explains why you are limited when it comes to having access to different types of credit which include getting a credit card.
Same as applying for a loan, it is still possible for you to apply for a credit card. There are still different companies that accommodate people with bad credit. The only difference is that you may have to pay higher interest rates and the credit line might not be that big. It is a good starting point for you to start monitoring your finances and at the same time, ensuring that you handle your finances well whenever you use your credit card to make purchases.
Things to Consider When Getting a Credit Card
Before you even start applying for credit card, you need to have a checklist of the specific things that you need to consider. These allows you to have the best deal.
1. First is you need to take into consideration the APR or the annual percentage rate. This is basically the cost of borrowing the credit card. In the event that you are not able to pay the balance for every month, it only means that if you get a card with a high annual percentage rate, it is much more expensive. That is why it is very important that you take the time to compare the rates among various cars in order for you to select the cheapest. Take the time to compare other related fees, incentives, and charges.
2. Another thing to consider is the annual fee. Most cards usually charge a fee for every year of use of the card. This fee is added to your amount you and you need to pay the interest on the fee.
3. Take a look at the minimum repayment. If you are not able to pay the balance for every month, you will be required to pay a minimum amount. This is around 3% of the specific balance.
4. There are credit cards that have charge hidden fees and other related costs. Make sure that even before you start applying and using a credit card, you are aware of the specific fees and other related charges.
5. Find out if the company is reputable. You don’t want to get into another problem if the company offering the card is shady.
6. Read reviews of the credit card. There different kinds of credit cards that are available for those with bad credit. It helps that you take the time to review them to see which one is the best choice.
Secured and Unsecured Credit Cards
How are secured and unsecured credit card different? They are not all that different. The only difference is that you have to pay for the security deposit. Once you give the deposit, you can just use the credit card like an ordinary credit card. The deposit also works as a line of credit.
How much is the deposit? It varies from one company to other. The lowest that you can find is around $200. Should you get an unsecured credit or a credit card? Considering that secured credit cards require deposit, many would opt to have an unsecured credit card.
Once you have the checklist, you can now start searching for unsecured credit cards for bad credit. Here are some options you may want to consider:
Capital One Secured Mastercard
This is a very good choice since it does not require pre-qualification. There are no upfront fees so you never have to worry about annual fee. They offer an annual percentage rate of 24.99%. Who should get this card? If you want to establish your credit without having to worry about costs, this is definitely a good choice.
You do not pay for any annual fee. You also have the option to have low amount and eventually get a bigger line of credit.When you utilize your card the right way, you can also have a refund on the deposit.
In using the card, here are things to keep in mind:
- To have your line of credit, you need to have a deposit. This amount is refundable. It actually depends on how much you want to put down. From $49 to $200. The choice is yours.
- Once you start using your credit card, you need to make on-time payments. This is to avoid incurring interest and for you to have higher credit line.
- They have the CreditWise where you can see your credit score. This enables you to track your credit score.
Indigo Platinum Mastercard
Another good option is the Indigo Platinum Mastercard. This is quite different from the previous card. The annual fee ranges from $0 to $99. The annual percentage rate is at 23.9%. Pre-qualification is also available. The good thing is that even when you filed for bankruptcy, you can still get this credit card.
For those who have filed for bankruptcy, this is a good option as they are not too restrictive. The truth is that once you file for bankruptcy, it stays on your credit report for years. This makes it a whole lot more difficult to start rebuilding your credit. But with Indigo Platinum Mastercard, you are not denied of credit card application right away.
For this card, there are things to keep in mind:
- To see if your application will be approved, it is strongly recommended that you answer the pre-qualification questions truthfully. This saves you time and energy.
- To strengthen your score, you need to pay your monthly balance. This is very essential in order to avoid high penalties.
- When your credit score has significantly improved, the next thing that you can do is to switch to another card where you get to have rewards.
Credit One Bank Unsecured Visa with Cash Back Rewards
The Credit One Bank Unsecured Visa is also a good option. It offers a variable annual percentage rate ranging from 19% to 25%. Pre-qualification is also available so you will know if you are eligible to apply for a credit card. The nice thing about this credit card is that it has a rewards program. It offers 1% cash back on certain purchases.
This credit card is a top pick among experts because it is an unsecured card. On top of that, you also get to have rewards. For your purchases, you get 1% cash back. So when you spend on mobile phone service, groceries, gas, etc, you get to have the rewards. Another benefit is that when you pay your credit card on time, it helps you establish your credit once again.
How do you use the card? First, you need to undergo your pre-qualification process. When using this card, it is strongly recommended that you use it for eligible transactions like paying for Internet, groceries, and gas in order to qualify for the rewards program.
Milestone Gold Mastercard
The Milestone Gold Mastercard is a bit expensive when it comes the annual percentage rate that they offer which is at 23.90%. But if you are looking for an unsecured credit card, this might still be one option you may want to consider. Pre-qualification is available and even if you have previously filed for bankruptcy, you can still apply for the credit card. Upfront fees range from $35 to $99.
One of the pros of this credit card is that even if the person has previously filed for bankruptcy, it does not automatically disqualify them from getting a credit card.
How to use the card? Since the offer pre-qualification to check whether you are eligible, make use of it since they do not have to enquire on your credit score. Once you are already approved of your credit card application, it is very important that you make on time payments especially since they have high penalty for delayed payments period once your school gradually improved, you can actually go for other options were other types of credit card available.
This credit card has a relatively low opening for you period but it is very important that you need to know that you need to pay around $25 for a fee period if ever you make any late payment or if you go beyond the limit, you also need to pay $38.
Indigo Unsecured Mastercard
Another Indigo credit card that you may want to check out is the Indigo Unsecured Mastercard. There is no security deposit required. On top of that, it is a stylish credit card that will fit your personality and it is completely free. For people who have poor credit scores, they are not too strict with credit card application.
Since they have pre-qualification process, you will know if you qualify without them having to ask for a credit report. The credit card is accepted in all shops around the world that accepts Mastercard. In case there is fraud or your card is stolen, they offer security and protection features so you know you are protected.
Total Visa Unsecured Credit Card
Having a bad credit does not mean that you can no longer get a credit card. If you are open to other options, you don’t actually apply for a Total Visa Unsecured Credit Card. This card does not offer anything special. But it is actually a good credit card that you can use to establish your credit score again and to have a means to the pay for necessities. When getting this card, you are given a credit limit that is around $300. This means that you can reduce your risk of spending too much.
When using this card, it is very important that you ensure that your credit usage is low. Before you make any big purchases, think about it carefully period since the card has high annual percentage rate, you need to pay all of the balance per month period for you to finally improve your credit score.
There is an annual fee, processing fee and monthly service fee.
With Surge Mastercard, you never have to worry about the process. The application process is quite fast and very easy. It does not take a long time. When your credit card application is approved, you can now use the card at all locations where MasterCard is actually accepted. The nice thing about Serge MasterCard is that it allows you to have online account access 24/7. Then again, the downside is that there is a checking account required.
Secured Credit Card
Although getting an unsecured credit card is a viable option, getting a secured credit card is also not a bad option. The application process tends to be much easier.
Discover It Secured Mastercard
This card is voted as one of the best card in 2018. You can use this card to build credit. There is no annual fee. The only thing is that you have to have a security deposit which is around $200. This will also serve as your credit line. In getting the Discover It Secured Mastercard, you get to have the following features:
- When you spend your card at gas stations or restaurants, you can get 2% rebate.
- After a few months, if you have been consistently paying on time, you can now get an unsecured credit card.
- The introductory annual percentage rate is 10.99%.
- The balance transfer fee is 3% and there is no foreign transaction fee.
How to Build Credit?
Whether you are getting an unsecured or secured credit card, the next step is for you to think on how you can start building your credit. Having a bad credit can negatively affect you in so many ways. The good news is that you can use your credit card to start building your credit.
Here are some things that you need to keep in mind:
- The very first thing that you need to have is your credit report. If you feel like there are things that you want to dispute, for instance if there are errors, you can always contact them to make the necessary corrections. You can either call them or contact them online. You may also want to contact a credit repair company to help you.
- When you already have your credit report, now you know where your credit standing is. If your credit card application is already approved, you can use your card. When you pay on time and avoid any penalties, this exhibit good behavior which can have a positive impact. This explains why some credit card companies allow you to upgrade your card or even increase your credit line. As for your credit score, you won’t see it right away. It may take time. But after a year, you can definitely see the difference.
- Keep in mind that your credit score does not just depend on your credit card transactions. If you have a current loan, you need to make sure that you pay on time.
Getting a credit card is very convenient. Then again, it all boils down to how disciplined you are when it comes to handling your finances. Your goal is not just to be able to get an unsecured credit card even when you have bad credit. Instead, work on improving credit score. Once you build your credit, you can have better options.
Alex is a former budget manager turned entrepreneur. He works mainly at home on his credit score advice website and writes a financial blog on the side. He hopes to expand his business into a full online lending company for bad credit as soon as he gets enough investors.