Consumers who cannot qualify for a standard credit card have the option to get a bad credit credit card and use it to rebuild credit. Nevertheless, not all credit cards for bad credit offered in the market have your best interests at heart. Some issuers may actually take advantage of consumers with bad credit by imposing unreasonable rates and fees. In this article, let’s talk about how you can avoid unfair bad credit credit card deals.
Why Diligence Pays Off
When searching for a bad credit credit card, diligence is truly a virtue. Some people may immediately sign up for the first credit card offer they see, without doing further research but such a move can be risky. Even when the offer appears to be great, exploring all your options is always worth the effort.
Keep in mind that different credit card companies have their own rules and restrictions. Some bad credit credit cards may have higher interest rates than the others. Some issuers may require a higher amount of security deposit than others. And that is why comparing credit card deals is very important.
Furthermore, not all issuers of bad credit credit cards or secured credit cards offer credit reporting to the major credit bureaus. If you intend to rebuild your credit history at the soonest time, you need to make sure that your regular payments will be accurately reported to the three consumer credit reporting agencies (Equifax, Experian, TransUnion).
A Variable-Rate is Bound To Change
Another fact that consumers need to be aware of is that credit cards with variable interest rates are bound to change at any time. This is because the rate is directly based upon the Index Rate in the market. Thus, if the Index Rate increases, your credit card APR would increase as well.
Although changes to the Credit CARD Law was meant to give consumers some protection against soaring rates and fees, unfortunately there is no cap limit on variable interest rate increases. That means, if you choose the wrong card, you could still find yourself stuck with a bad credit credit card with a very high APR.
Therefore, while the introductory interest rate may be incredibly low, if it is a variable-rate, then the low rate is bound to go up once the introductory period ends. Under the new Credit CARD Law, an introductory offer must be last for at least 6 months, no less than that. In addition, the cardholder must be notified 45 days in advance before applying the rate changes.
Unsecured Credit Card Upgrade Options
Some bad credit credit cards offer an automatic upgrade to an unsecured account if the cardholder proves to be consistent and timely with submitting payments. On the other hand, some issuers may not provide automatic upgrades unless the cardholder makes the request. Bear in mind that moving to an unsecured credit card gives you the opportunity to enjoy lower interest rate and higher credit limit without a security deposit. Thus, if you have a secured credit card and you have been a good payer for the past year, be sure to request your issuer for a non-secured credit card upgrade.