7 signs of a bad credit card
You are in a bad credit situation, but you need a credit card. It can be difficult to qualify for credit cards if your credit is not up to par. But there are credit cards that can help people with bad credit improve their score. Unfortunately, there are also credit cards that can take advantage of those with bad credit. You will want to look for red flags for credit cards.
If you want to choose the right credit card, you need to know what to avoid. That’s why we’ve listed seven top red flags to watch out for. We don’t want you to have a bad credit card in your hands. And trust us – neither can you.
1. Extremely high interest rates
People with bad credit generally cannot qualify for the same interest rates as those with good or fair credit. This is the way the industry protects itself against risky customers. But some cards for people with bad credit charge unnecessarily high interest rates – sometimes more than double what a person with good credit can get.
The best way to avoid sky-high interest rates is to shop around and find bad credit cards that offer lower rates. For example, the Green Dot primor Visa Classic secured credit card offers a variable APR of 13.99% and higher credit limits once you make five monthly payments on time.
2. High annual fees
Some bad credit credit cards don’t charge an annual fee while others do charge a fee, but keep them at the bottom of the scale. Then there are the cards that charge over $ 100, which is comparable to the annual fee for some high tier rewards credit cards. But an annual fee of over $ 50 without any rewards benefit could be a red flag. Generally, there is no reason to shell out more than $ 50 for an annual fee if the card does not have a rewards system.
Are you looking for a credit card with a fair annual fee? Take a look at Merrick Bank’s secure visa. The annual fee is only $ 36, billed $ 3 per month thereafter.
3. Related costs
Some credit card issuers will tackle suspicious charges that most credit cards don’t include. These may include a processing or application fee required to open your card or a monthly maintenance fee that is on top of your annual cost.
While annual fees and late payment fees are commonplace, beware of excessive fees that would cause you to pay a lot more for the card than you bargained for. Make sure you understand the card’s fee structure before you apply.
See: 8 Simple Credit Rules Every Consumer Should Follow
On the other hand, do not strike secured credit cards from a reputable card issuer. These cards require you to deposit a security deposit which, in most cases, you eventually recover by managing your account responsibly.
4. Incomplete credit reports
To improve your credit score, your credit card activity should be reported to everyone three major credit bureaus—Experienced, EXPGY,
and TransUnion. TRU,
If your card issuer doesn’t, it limits how much your card can help you improve your credit.
This is why a secured credit card, which requires a security deposit, is preferable to a prepaid debit card. Prepaid debit cards generally do not affect your credit because your account information and payments are not reported. You need to make sure that any card you plan to report to the three major credit bureaus.
5. High credit limits
High credit limits look great. But when it comes to bad credit credit cards, you might want to be wary. On the one hand, you might have to pay a lot of fees or an excessive interest rate to access a high credit limit. On the other hand, high credit limits can quickly get out of hand if you’re having trouble managing your debt.
6. Lack of follow-up
People with bad credit should pay special attention to their finances. If a card doesn’t offer a way to monitor your credit progress or track payments, you might want to keep looking. Opt for a card with online account options and email or SMS alerts for upcoming payments to more responsibly manage your payments on time.timely payments make up 35% of your credit score, after all.
7. No room for improvement
Bad credit cards should be designed to improve your credit and reward you for responsible behavior. If not, you should look for a card that does. For example, secured credit cards may offer the opportunity to earn an unsecured card after a period of responsible use and timely payments. Or, they will offer you to increase your credit limit without requiring an additional deposit.
Start your research on credit cards that can help you improve your credit score by checking out this roundup of credit cards for bad credit. Remember, before you apply you will want to know where your credit is by checking your credit score.