Many consumers are aware of credit cards that may be available for a variety of uses but when it comes to consumers who have a bad credit score and are looking to improve their poor credit situation, many are often in a situation where secured credit cards could be their only opportunity at the present time despite the fact that there are numerous types of cards which may advertise opportunities for consumers in different credit positions. However, if a consumer has seen their credit score drop substantially over the past months, it may be beneficial to address the causes of these bad credit situations that a consumer may face and begin to implement certain solutions so that they can improve their overall credit standing.
Currently, many of the rates that are being advertised on these bad credit secured credit cards are around 20%, with some being much higher and others possibly coming in at a lower APR, but what consumers need to understand is that these rates while they may not be affordable should not really factor into their credit card use as someone who is using a bad credit credit card for the purposes of improving their financial position does not necessarily need to be carrying a balance on these types of cards.
As an example, if a consumer gets a secured credit card with a rate of around 19% to 22% they will find that carrying a balance on these cards will lead to much higher overall costs no matter if their credit limit is low or spending is kept to a minimum. While there are some consumers who feel that these additional costs are not necessarily a factor in their overall bad credit repair plan, cardholders are usually not going to be in the best financial position if they are carrying a balance and this is another source of a bad credit score, meaning that consumers may have habits where they spend beyond their means to repay.
Yet, consumers who are facing a bad credit score but attempting to improve their credit standing are able to get these bad credit credit cards if they offer some form of collateral, on secured cards, but unsecured bad credit credit cards may be available for some men and women as well. However, reading the fine print, reviewing the interest rate, and looking at any fees that may be charged will be required before any consumer makes a commitment to one of these bad credit credit card opportunities.
However, if the consumer does get a relatively high interest rate on one of these secured credit card they can negate any of the issues that may arise by spending on their credit card monthly but paying off the total balance when the bill comes due. Not only can this help improve a consumer’s credit score, as long as they have researched to make sure that the credit card they receive is reputable and reporting their activity to the major credit bureaus, but use of this credit card in this fashion can lead to better financial habits when a consumer’s credit score improves and unsecured lines of credit may be available.
It needs to be understood though, secured credit cards are not optimal for all bad credit borrowers as some men and women may need to begin paying down debts first before they enter into the arena of building a better credit history through the use of credit cards or other forms of debt. If this is the case, consumers may have to consult a financial professional to make sure that they are on the right track for their specific situation and are also going to benefit from using certain types of secured credit cards for the bad credit repair process.