Unsecured Credit Is Commonly Thought Of As The Best Choice For A Credit Product

Category: Finance, Credit.

If you have bad credit, it can be hard finding bad credit unsecured credit cards. There are a growing number of such credit card products becoming available on the market, many through well known national lenders.

Lenders are realizing there is a growing market however for bad credit products, and bad credit unsecured credit cards are no exception. The biggest downside to bad credit unsecured credit cards is that they generally have high interest rates, high fees and high costs to open an account. Depending on your needs and goals, you may want to consider some other options. It s important to know ahead of time what you are getting into financially with a bad credit unsecured credit card, and determine whether your current financial situation makes it worth it to apply for one of these cards. First, here are some of the terms and costs you should consider when applying for a bad credit unsecured credit card: Interest Rate: The interest rate you pay will of course be higher than standard good credit rates, but these bad credit rates can vary so be sure to check multiple products before you decide on one card. The interest rate may also go up if you are late with a payment or go over your approved credit limit.

Interest rates are higher for cash advances than for purchases you make with your card. Some rates can go as high as 35% in those cases. Annual Fee: Just as with good credit cards, you will pay an annual fee of anywhere from$ 50 to over$ 100 for a bad credit unsecured card. Be sure you know what the terms are when you apply. Be sure to find out what this annual fee is, and find out whether you can break up the payment over more than one month. This charge can be more than$ 100, and the lender will use this to cover its risk that you may default and fail to pay your credit card balance.

Application Fees: With bad credit unsecured credit cards, you will usually pay a one- time application fee or account opening fee. Monthly Maintenance Fees: Some bad credit card lenders also charge a monthly maintenance fee. Other Fees: There may be additional fees charged by the credit card lender in addition to the fees listed above. This is a fee to make sure the bank is making money on your account, and gives the bank some income against the possibility that you could default. Be sur to read all of the terms and conditions to know what all of the fees are. As you can see, the fees you start your bad credit unsecured credit card can total as much as$ 300 or more.

Even better, ask the lender to go over all the fees with you on the phone, and highlight where these fees show up in the terms and conditions as set out on the lender s web page or printed documents. You could also have monthly fees due in addition to having to pay for your purchases, and interest on those purchases. The question you need to ask is, is it worth it? Some lenders will allow you to pay these fees over more than one moth- but should you pay them at all? Is it worth putting$ 300 up front to have an" unsecured" credit card, when that$ 300 is money you are basically giving to the bank for the privilege of having a credit card? For the same$ 300, you could put that money into a bank and get a credit card issued against your balance.

In the alternative, you might consider a secured card. All applicants are generally approved, since the bank holds onto your$ 300 until you pay your card as agreed. Secured credit cards are temporary anyway, as you use them to rebuild good credit. Many secured card products are reported to the credit bureaus so that you will get the benefit of improving your credit score for paying off your credit card as agreed. After a few months of paying on time, you generally can apply for unsecured credit on better terms than you can get from the bad credit products. Secured products can be a cheaper alternative to achieving the same result- restoring your good credit.

Often the company that gives you the secured card will offer you unsecured credit when you demonstrate a good payment history. Unsecured credit is commonly thought of as the best choice for a credit product. You will have to determine which is the right option for you- but knowing what to look for means you can now make an informed choice. However the high fees for a bad credit unsecured credit card can make these cards a poor choice financially.

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