#Are There Unsecured Credit Cards for Bad Credit?

17 October,2011

For the most part, when you have poor credit, the way to rebuild it is to make use of a secured credit card. However, many would rather have an unsecured credit card. While it is a little harder to find unsecured credit cards for bad credit, it is possible. However, if you do have poor credit, you have to be willing to pay a little bit more for the privilege of using an unsecured card.

Upfront Fees

If you have poor credit, you probably won t qualify for the best credit cards, which offer low interest rates, and no annual fee. While it is usually a mistake to get a credit card with a lot of fees, if you have lousy credit you can t really be picky. Some of the fees you can expect to pay if you want an unsecured card for unsatisfactory credit include:

• Application fee
• Processing fee (which is different from the application fee)
• Annual fee
• In some cases, there is also a small monthly fee.

When you use these credit cards, you will start out with charges already on your card. Indeed, many of these unsecured credit cards will hit you with between $100 and $200 in fees initially. Often, those go straight onto your credit card.

Low Credit Limit and High Interest Rates

Also, be prepared for low credit limits and high interest rates. Because you have dissatisfactory credit, the credit card issuer will see you as a risk. This means that you will probably have to pay a higher interest rate, usually in the high teens or low twenties. Also, you will have a low balance, usually between $300 and $500. If you are paying $150 in fees to set the card up, and you only have a balance of $400, you can see how it can impact your ability to use the card. However, if you get a bad credit unsecured credit card, you should be using it to help you build better credit anyway.

Building Better Credit

Before you sign up for an unsecured credit card, and pay the fees, make sure that you double check that the issuer reports to the credit bureaus. Your credit won t improve if your habits aren t being reported. Once you know that the issuer reports to credit bureaus, it s time for you to start repairing your credit .

Don t carry a balance on this credit card, since you will have to pay a high interest rate. You should also be careful to make your payments on time and in full. In fact, one of the best things you can do is to make on-time payments consistently. So, as soon as you get your card, make on time payments, and pay off the balance each month. As you show responsible financial and credit behaviors, your credit scores will improve sufficiently for you to apply for and receive approval for a better unsecured card that has a lower interest rate and no annual fee.