Getting a bad credit credit card is very easy to get these days. There are a lot of companies who offer such credit cards and cater to the person who has less then favorable credit. Let's face it, they have become more and more essential to everyday life. You need one to make a plane or hotel reservation, to rent a car, have as an additional piece of identification and to build good credit. Whether this is your first cardor you need one to rebuild your credit, learning the proper way to use them is a must if you want to avoid the nightmare that plagues millions of people known as debt.
First, get in the mind set that they are not "extra money". Keep repeating that, it's important. Think of it more like a short term loan, with interest if not paid back when it's due at the end of the month. If you start thinking this way you'll only use your cards for emergencies, to purchase something that you can pay for in cash by the end of the month, and to build up your credit.
Secondly, when trying to establish or re-establish your credit here are 4 important tips to remember when using credit cards, while keeping you out of debt:
Make a few small purchases then pay it off completely at the end of the month. You should not use these cards to carry any kind of balance.
If you can not pay your balance in full then try to pay more then the minimum. Some of these cards carry reasonable interest rates like 9.9 percent while most charge in excess of up to 21%. No matter what the rate is if you pay only the minimum balance, it will take you years to pay off the debt. You will still incur interest charges and fees and that could result in you literally paying the same debt over and over again before it actually gets paid. That $ 100 dress that you absolutely had to have, even though you really could not afford it, could easily cost you $ 500 if you are not careful.
Pay all your bills on time, even if you "have" to pay the minimum due. Late payments can drag down your credit score faster then anything else can.
Clean up you credit reports. If your credit reports have obsolese, inaccurate or unverifiable information, getting rid of these items can be just what your credit needs to boost your credit score and help you qualify for the better cards and interest rates.
If you have bad credit there are 2 types that are available to you, a unsecured bad credit credit card and a secured bad credit credit card. Most bad credit unsecured cards require that you do not have any late payments or delinquent accounts for the past 6 months before you can qualify. Secured cardsgenerally have higher interest rates, an annual fee to use the card and require that you make a deposit into a savings account equal to your credit limit. You should not keep secured cards longer then necessary and only use them as a stepping stone to an unsecured card with better interest rates and no excess fees.
Just because a credit card offers you a low interest rate, does not mean that you will not have other fees to worry about. Some companies will charge processing fees and application fees in addition to an annual fee and a monthly maintenance fee. This is all on top of the interest you will pay if you do not pay your balance off in full each month. You should not be paying a monthly maintenance fee and an annual fee at the same time. Never pay an application fee, processing fees are okay but you should not be paying more then $ 60. Always read the fine print and find out all the fees you will be paying for each card.
Make sure that the bad credit credit card you are applying for reports to all 3 credit bureaus, if the issuer does not report your good credit, you've lost the major benefit of having the card.
Once you get a credit card, you'll start getting offers for other cards in the mail. Be very careful and limit yourself to only 2 or 3 cards. Also, know that every time you apply for credit, a hard inquiry goes on your credit report. Points are deducted from your credit score if you have more then 1 inquiry in a 6 month period. You'll be defeating the purpose of establishing credit if you do things that will bring down your Credit Score.
A credit card can be a great vehicle to building up your credit but do your research, do not take the first card that comes along just because your credit is poor and you can get it. Make sure that it is right for you and is going to benefit you and not hurt your credit even further.