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Can I Get Bad Credit And Unsecured Credit Cards?
By Bueford
Regardless if you have good credit or bad credit or even if you are rich or poor, there is a credit card on the marketplace for you. If you have bad credit then Read more...
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Credit Cards For People With Bad Credit – How To Avoid Getting Ripped Off
By Charles Phelan
If you've had credit problems, then you've probably received offers for credit cards aimed at people with bad credit. These offers range from legitimate, to questionable, to outright scams. How can you tell the difference? The answer is to read the fine print, usually to be found in a document called "Terms and Conditions." To show you the difference between "the good, the bad, and the ugly" in the low-end market, let's take a look at the fine print associated with such offers.
We'll start with one of the more popular low-limit "starter" cards available today. These are actual terms published by a major company at the time this article was written. The card comes with a Visa logo on it and looks like a regular credit card, so you can use it as an extra piece of identification when you're booking a hotel room, renting a car, and so on. In the "Terms and Conditions" document, the first thing we see is the annual percentage rate (APR), listed as 19.5%. That's not a particularly attractive rate, but it's not as high as a lot of other cards. A little farther down, we see that the APR for cash advances is higher, 25.5%, which is normal since there is greater risk involved to the company.
Where it really gets interesting is the section that lists the fees associated with the card. In this example, there is an annual fee of $150! There is also a $29 fee to open the account, as well as a monthly "maintenance" fee of $6.50. Whew! That's a lot of fees. But wait! It gets better. Toward the bottom of the document, buried in the fine print, we see something called "Available Credit Limitations." In 8-point typeface (very tough to read on a computer screen or printed page), you are informed that your generous initial credit limit will be a whopping $300. On your very first statement, you will be billed for the $150 annual fee, plus the $29 setup fee. The $6.50 monthly fees will start appearing after you make your first purchase on the card.
Let's take a closer look at the math here. It will cost you $179 up front, plus $78 per year, to obtain $300 worth of credit. Your total cost for the first year is $257, assuming you pay off the balance each month and don't incur any regular interest charges. Sound like a good deal? Does it make any sense at all to pay $257 to obtain $300 worth of credit? That's 85.6% in effective interest! If you keep a running balance of $300 on the card, and just make the minimum payments every month, your effective interest rate will be 105.2% for the first year, and 95.5 % for subsequent years. That's some pretty expensive credit! This offer, while legal, still counts as a total rip-off.
As bad as the above sounds, it still only qualifies as "questionable" rather than being a full-on scam. There are much worse offers floating around out there. I've even seen some "deals" where the fees are so stiff you start out above the credit limit before receiving the card in the mail! In the bogus category
Additional
Resources
Bad Credit Doesn't Rule Out Unsecured Credit Cards
By Bill Smith
Many people believe that because of their bad credit, unsecured credit cards are not available to them. While it may be more difficult, there are options for people with bad credit who want an Read more...
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What Are The Most Common Credit Card Faqs
By Jon
Finding the right credit card for you can be a difficult choice that throws up many question. We've captured those below all in one place iv Read more...
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