At the present time, secured credit cards available to bad credit borrowers are averaging rates of around 22% to 24%, and can be made available to consumers who are in a bad position in terms of their credit history and score, but need these lines of credit to begin the process of repairing their personal finances. However, when it comes to looking at these rates, there are some banks that offer credit cards at a much lower rate, and some consumers may be drawn to these offers first, but comparing options available from a variety of financial institutions, as well as, looking at what rates are being advertised, are just a few steps that bad credit consumers must take before beginning the bad credit repair process.
Most consumers are aware of how a secured credit card works, but when it comes to getting one of these cards many will opt for the most affordable line of credit, which may be beneficial in certain cases but could also lead to problems. As an example, some financial institutions that offer these secured credit cards may advertise incredibly low rates, but there are some fees and requirements regarding the collateral that a cardholder must present which could offset any benefits that a low rate may bring.
Furthermore, many advisers often want consumers to look at the quality of a secured credit card, not just the interest rate, as the bad credit repair process with the use of these secured cards should not factor heavily into a consumer’s financial habits due to the fact that making purchases on secured cards and promptly paying them off in their entirety is usually the advised method of bad credit repair. Simply put, a secured credit card from a reputable lender, which reports credit activity to the major credit bureaus, should the best option even if the interest rate is slightly higher because a cardholder will, ideally, not carry a balance during the bad credit repair process.
Also, if a card advertises a lower rate and a consumer is not careful to compare opportunities from major banks, credit unions, or even smaller community banks, they could find that the amount of collateral that is required or the maintenance fees for these types of cards will offset any benefits they feel may have been gained from the lower rate, so again, rate is not necessarily everything when it comes to a secured line of credit.
Cardholders should mostly be concerned with building their credit history through proper purchases and repayments, and when their score has improved and an unsecured credit card may become available, this is where looking at rates can be more helpful, as consumers may be more likely to carry a balance on unsecured credit cards rather than one of these bad credit credit cards used specifically for repairing one’s credit history.