People with bad credit think that they do not qualify for good credit offers. It may be possible that they may have tried to get credit from a few lenders but when they failed to get them. Secured cards are quite suited for people with bad credit.
For secured card, one has to submit a security deposit, which guarantees you a line of credit for that amount. For instance, if you require a $700 line of credit, you have to deposit $7000 with the issuer, which immunizes your account. Since there is no much risk here for the card issues, there is more chance of the approving applications for people with bad credit or no credit.
You can use this secured card to make transactions, build credit like every other cardholder. This is in fact, a good opportunity for people to use the secured card wisely, restore and build credit. When you close the account, the security deposit is refunded sometimes with interest.
Apart from the option of secured credit card, there are also offers of some really good cards from mainstream banks. Here are some of the options that you can exercise –
1. Capital One Secure MasterCard – The card has a low annual fee of $29 and can help people with bad credit come up in a big manner. Though most secured cards offer spending limit equivalent to the amount you deposit, this card is a hybrid between a regular credit card and secured card. This is preferred as one of the best choices for people to get back into the traditional system of credit. You have to put $49 and can get a credit line of $200. By depositing money like $200, you can actually increase the credit line to $3000. Capital One also ensures that one you have been able to improve your credit score, you will get preference to avail of one of its unsecured credit cards.
2.Wells Fargo Secured Visa – You can apply for this card only if you have been out of bankruptcy for one year and there are no liens unsettled against you. Your security deposit between $300 and $10,000 can set the credit limit. There is a $35 annual fee.
3.Orchard Bank Classic Card – HSBC’s subsidiary Orchard Bank says that all applicants who give a security deposit will be approved irrespective of credit score being dismal or if you have declared bankruptcy. There is a $200 minimum security deposit, with no annual fee for the first year and then $35 annual fee from the second year.
4.U.S. Bank Secured VISA – This bank diverts your security deposit into an interest-savings account with a $35 annual fee.
Getting small installment loans like an auto loan or a small personal loan (best from a credit union, or bank) to the tune of $1000 which you can pay back on time, can help rebuild your credit. Though you will have to cough up a higher interest rate, the fact that you have an active installment account on your credit report can boost your score. Also don’t close your credit account because they may hurt your score. Most importantly, pay your bill on time, all the time because skipped payments can only ruin all the good work you have done.
There are three words that can make the difference in receiving a great loan or a bad loan from any lender: rates, terms, fees! It has been that way from day one, and it isn’t going to change anytime soon, so do your homework before any lender hands you the ink pen and says: “please sign all these copies.” Perhaps with one or two exceptions, the financial lending business is about as competitive as they come. Keywords like “promises,” “better deals,” and even “deception” are as prevalent as moss on a Mississippi tree stump. Lenders are everywhere with their hands out and palms up wanting your money. Just in the past decade, the mortgage lending business has enjoyed more ups and downs than an elevator in a 5 star hotel. So best you keep your wits about you when applying for any type of loan. And to help, we’ll open our book of “common sense” to assist you in this endeavor.
Short-Term Loans. The makeup of these types of “desperation loans” would be high interest rates, terms of one year or less, and even a pre-payment penalty charge if paid early. These lenders use names like Pay-Day loans, Hard Money loans, and Bridge or Gap loans. You’ll pay more in fees and high interest rates that could reach 16 percent or higher, but when you need it; you need it.
Banks and Credit Union Loans. These are the usual suspects that receive everyday activity and, in the long run, can and do offer the best interest rates and terms. However, not all of these lender types plays by the same rules, ergo, this may be the most difficult task you’ll run into in your mortgage shopping. Oh, they may have the same terms on the loans: think 15, 20, 30, and even, in some cases, 40 year terms, and probably the same or close interest rates, as well. But the “kicker” wearing a black mask and a smile will also have a name tag that says: “closing costs.”
The usual closing cost will consist of any other “loan related” fees like escrow, attorney, and title fees. On top of that come government fees, recording fees, and Notary Public fees. You may also have been “hit” with processing fees, application fee, and even get a credit report fee tossed in for good measure – Yikes! When the loan closes and records, you’ll also be required to pay “points” which relates to one percent of the loan amount. This fee can be offset by taking a higher interest rate, or buying down the rate for up to three years, which can be costly. Finally, here is your “knowledge parachute.” A good faith estimate – your best friend in this headache. It’s required by law and you get it prior to loan closing, so read it – twice!
Credit Card Debt Negotiation Tips
Getting wrapped up in credit card debt is an all too common problem in this economic climate. You don’t have to stay in that quagmire, though, you can negotiate a way to settle your debt that works for you and the lender.
Contact your Credit Card Issuer
If your credit debt has exceeded your ability to pay, don’t let your bill go unpaid. Make a call to the card issuer immediately and ask to speak with a manager. Call before your miss any payments and they will be much more willing to work with you.
The problem with making this call is that the company may immediately freeze your card. Furthermore, some companies won’t deal with you until it is clear you have missed several payments.
Keep Expectations Realistic
No one is likely to cancel your entire debt, so, enter negotiations realistically. Let the company know that you are considering bankruptcy if you actually are. The fact is you have something they want; money.
Don’t accept their first offer, this is a negotiation, after all. Come to the table with an idea of what you want and how much you can manage. This sets the bar in the compromise you are seeking.
Which Option is Best for You
Three common ways that credit card companies address debt settlement are lump sum, workout arrangements and debt management programs.
In a lump-sum arrangement you pay off, in one large payment, a portion of the debt. The rest is forgiven. This works well if you have access to a reasonable amount of money but not enough to pay off the whole card.
A workout arrangement improves your terms and eliminates the worries of late fees and over-limit penalties. This option can help you avoid negative marks on your credit report. Make sure you get the card company to commit to leaving you a clean record, and get it in writing.
Debt management programs offer counselors which will help you to pool your debt so you can make one monthly payment while also reducing how much you owe to each lender. You will have to pay a monthly fee to use the service, but this is a viable option if you feel completely overwhelmed. Make sure you find an affiliate, reliable firm if you go this route.
Retain written notes of each conversation you have with your lenders. Get a name, employee number and call back number. Write down all the conditions offered and get the offer in writing before you start making payments.
Use certified mail for all written correspondence as you work through the process. Put copies of any letters you write in your file for safekeeping.
Once you have negotiated an agreement and have it in writing make sure you keep up with your new payments. There is light at the end of the tunnel.
People are usually divided when it comes to assessing the usefulness of credit cards. While it cannot be denied that credit cards can really bring a lot of convenience especially when it comes to online shopping and cash-less transactions, a lot of people also get buried in credit card debt because they don’t know how to put the credit cards to good use. Credit cards are very advantageous when you know how to use them properly, but when you don’t have the self-discipline needed to make good use of credit cards, then they can cause a lot of problems. As a credit card user, it’s important for you to be knowledgeable about the benefits of credit cards and how to take advantage of them, but you also have to know about the disadvantages and ensure that you have enough discipline to use these credit cards properly.
Concentrating on the Advantages of Credit Cards
If you want to concentrate on the advantages of credit cards, there are actually quite a lot. For one, credit cards give you debt leverage. This means that whatever you purchase and enjoy today, you don’t necessarily have to pay for just yet. Depending on cutoff dates, you have at most 45 days to pay back the debt you incurred today. During that period of time, you can do a lot of things. If you own a business and you buy your capital for instance 45 days in advance, you have that period of time to recover the money and keep it rolling. Another advantage is that you can take advantage of deals and discounts when they arrive, particularly when it comes to shopping online. With online shopping there are a lot of deals, and you need to have a credit card to get these deals as they happen.
Turning Rewards into Savings
Another very important advantage of credit cards is the fact that credit card companies these days offer a lot of rewards for their clients. To encourage people to keep using their credit cards and to encourage new clients to sign up, credit card companies have come up with all kinds of rewards systems to reward the users for constant and loyal purchase. If you’re a credit card user and you want to have a lot of savings and rewards, this is one way to get it. Make sure that you know the menu of rewards your credit card company usually gives out, and just keep collecting points to achieve the rewards that you want.
The Importance of Self-Control
Even with all of these rewards available, you should keep in mind that you couldn’t just keep buying things without remembering that you have to pay for them in the future. Everything you transact with a credit card is basically a debt, which means that you have the obligation to pay for it sooner or later. This is why it’s very important to practice self-control with credit cards. You can’t just purchase as you want without thinking of future implications, because this is usually how a lot of people get buried in debt.
Prepaid credit cards are witnessing a steady rise in popularity with many opting for them, as compared to conventional credit cards. With mounting rates of interest, different types of charges and penalties, cardholders are finding prepaid credit card as safer bets. Though the US economy has improved, there is still an air of speculation about the US economy.
Credit card companies are holding back on credit card applications as a way to immunize themselves against potential losses. At the same time, there has been an increase in applications for bankruptcies with more than 1.25 million cases seen during recession. Among alternatives that consumers are looking for, debit cards, secured credit cards and prepaid credit cards are getting a lot of appreciation.
Prepaid credit cards do not require any collateral in the form of a bank deposit; they do not even have credit limits. Most people who opt for such types of cards are those with poor credit, maxed out credit limits and often find it tough to find their applications approved by banks.
As we know, secured cards have credit limits equivalent to the amount of money put in the bank deposit. But in prepaid credit cards, there are no such things as credit lines; you have to load funds into the card before you can start using them. This gives consumers better control of the transactions they make using the card.
Bill Forrester, a credit card user who has turned to prepaid credit card says, “This carries the convenience of plastic without the trappings of high interest rates and stupid surcharges. They replace cash in a much better manner.” Secondly, prepaid credit cards ten to be accepted anywhere major credit cards are accepted. This really gives you flexibility of cash and ease of carrying plastic.
Suppose you want to make an online purchase and you are reluctant to give our credit card information. In this case, the prepaid credit card can be your best help; you can make the purchase and still do not need to give any information to your online merchants.
The other significant benefit of using a prepaid credit card is that you pay only for things that you can afford at particular point of time. This means, you do not have to worry about balance transfers, payment for other benefits apart from the interest rates. You can compare these cards as your regular bank accounts, and directly deposit paychecks into the prepaid credit card instead of a bank account. This makes way for easy management of money even for the younger lot who are looking for their first credit card. They do not have to be worried about being burdened by unnecessary charges on their card.
There are however a few charges associated with prepaid credit cards which include application fees, activation charges, maintenance fees and even additional charges for using their ATM services. The flip side is you cannot delay your payment, the way you can do with a regular credit card. Also, one should know that you may be charged a certain amount as fee if you do not keep a quarterly balance lie the way it happens with regular bank accounts.
Anyone one that has ever struggled with debt will understand just how much of a burden it can be. Not only does it affect you financially, it impacts upon every area of your life, causing stress and putting a strain on home life. Owing large amounts of money to creditors has you longing for financially independence, without the need to rely on loans and credit cards. The only true way of achieving such independence is through debt elimination and many financial advisors suggest that eliminating debt completely is the only way to a brighter future.
Confronting your debts is the first step in debt elimination, once you have acknowledged that you are in debt, you can begin to tackle it. This first stage is often the hardest, many people that are in debt are ashamed to admit it, and thus find themselves with mounting bills as they struggle to make repayments. However, taking a stand against debt is the only way to finally obtain financial independence.
Tackling debt is going to be almost impossible without the help of a financial advisor – someone that can look through your finances and put a debt elimination plan into place. A financial advisor will be able to interact with creditors on your behalf – something which is often a struggle for many people. When dealing with creditors alone, you can often find them to be pushy and intimidating, receiving the help of a financial advisor will ensure threatening letters and phone calls are stopped. They will also put into place an arrangement with each creditor, starting with the most important debts (mortgage, fuel bills, secured loans etc.), whereby you pay them a monthly sum that is affordable to you based on your income and essential outgoings.
While a financial advisor will be key in debt elimination, there are steps that you will need to take to stand a chance of achieving financial independence. The first thing to do will be to start using cash as opposed to credit cards, many financial advisors will recommend that credit cards are cut up and thrown away. Any offer of credit received through the post should be instantly thrown in the trash and you will need to learn say NO when offered credit over the phone or when at the mall.
A trustworthy and experienced financial advisor will be essential in creating a debt elimination plan that works around your circumstances. Using the Better Business Bureau will ensure that you find someone with a long and proven track record in delivering financial independence for their clients.
Getting finances under control will help to get your life back and start afresh without the constant worry of creditors – a debt elimination plan will ensure this and is a great first step towards achieving your financial goals.
It is apparent that people who do not have credit history find it tough to get approved for a credit card. Some of the people who fall in this slot are college students, people in low income groups and the ones with bad credit history. Here are ways in which you can apply for a credit card with no established credit history
1. Make sure you have a job – Even if you are a student under the age of 21; get a job if you want a credit card. What card issuers look for is the ability of the person to repay back the money. So if you have a job with decent income flow, they can give you a credit card with a modest credit limit, to begin with.
2. Get a student credit card – If you are a student, you may well be eligible for a student credit card. These are especially for college students who do not have a credit history or large income. But please bear in mind that the entail high interest rates and other fees.
3. Store credit cards – Retail store credit cards do approve credit card applications for those with no credit. But you may not get the reputed Visa and MasterCard brands. Secondly, the interest rates can be quite high and the credit limits may be low. So if you do get one, use it as a stepping stone to boost your credit profile, just use it less frequently and pay off your balance in full.
4. Secured credit cards – Secured credit cards are a good option if you want to have a credit card on the face of no established credit. Just pick the ones that will report to major credit bureaus and has low fees. For a secured credit card, you have to make a security deposit to get a credit limit. Aim to save your money for a few months in a security deposit if you do not have money outright. You can go for credit cards like Citi Secured MasterCard, Capital One Secured MasterCard and Orchard Bank Secured MasterCard which involve a minimum security deposit of $200. There is also the Capital One Secured MasterCard which entertains a security deposit to $49 or $99 and gives you a $200 credit limit.
5. Co-signer – Get a co-signer, who can sign for you on your credit card application. This may be your parent or your spouse. If you are not able to get a credit card o our own, you can make use of someone else’ good credit. You can get someone with a good job and good credit to apply with you. Though your application may be approved, there are things that you have to be in the know. The other person will be watching your purchases and even ensuring that you pay the credit back in full. This is because if you miss out your payment or go over the limit, the co-signer’s credit is also affected.
6. Do not apply many times –Too many inquires can hamper your credit profile, even before you build it. So, for instance, if your application for student credit is rejected, do not apply again. Instead apply for a retail store credit card or apply with a co-signer.
Things to note:
You may come across advertising gimmicks which talk about getting a credit card easily without credit history. Though some of them may have consumer interest in their mind, most of them have a catch in the form of high fees or high
interest rates or both.
The other thing that you can do is to take an alternative of credit card, which is a prepaid card. This is helpful only if you do not have a debit card and a checking account. Prepaid cards do not build your credit history; they just help you make transactions similar to the way a credit card would.
The temptation to get a new credit card always comes calling. While it may entitle you to new kinds of benefits, you do have to address the implications that the card will have on your credit score. If you do have a good credit rating- excellent or very good- then the implications of getting a new credit card do not hold so much gravity per say. But if you are struggling to raise your credit, it’s a decision that you might want to address in deeper detail.
There are two sides to applying for a new credit card, and both of these are addressed, starting with the advantages. Getting the new card can actually help you improve your credit score, but you have to be a disciplined shopper to gain this advantage. The goal is to drop your credit utilization, so that your credit score can increase. But this means not making new purchases with the card, which somewhat defeats the purpose of getting the card to begin with. However, if your primary goal is to raise your credit, it is the reality you have to put up with. If you absolutely must spend on the new credit card, make sure you use very little of the available credit. Around 10% is sufficient, since it will give you a good credit-to-debt ratio. Try to stay below a 50% credit limit, to avoid having a poor credit ratio.
The disadvantages in this case do outweigh the advantages. You should not get a new credit card if your solitary goal is to increase your credit score. The risk is far too big, and besides, there are other ways to raise your credit score. That said, there are some hits that your credit score takes when you apply for a new credit card. The first is with your credit inquiries. Whenever you add a new credit card, a hard inquiry does show up on your report. The credit pull is made by the lender offering you the card. As long as your application is submitted, the credit inquiry will be made, even if you have not been approved for the card yet. So what does that mean? Well credit inquiries are a measure of your financial responsibility. When too many of them show up on your credit score, it is lowered, since they account for 10% of your total score.
Opening a new credit card will also lower your credit age. This is basically the length of time that has passed since you first opened up a line of credit. The rule is, the older your accounts are, the better credit score you will have. This in other words is to say that adding new accounts will lower your credit age, and this will result in a lower credit score.
In the end, you have to decide whether the new credit card is the best financial move to make. You should only apply it on a basis of need, not want.
If you already own a rewards credit card then you know how exciting it can be, especially if the rewards you are getting are really valuable. Every year thousands of people apply for different types of rewards credit cards, so they can get more back from what they spend.
Readers Choice – Best Rewards Card
As thrilling as it is to be rewarded for spending money on your credit card there are a few hidden dangers you need to know about.
Yup, and if you don’t pay attention to the fine print of your reward credit card details it can lead you down the path of getting into some financial trouble.
So, you’re probably wondering about what kind of risks there are and even better, how to avoid them?
Or even better yet, what is the best way to use your card that will benefit you the most?
Here is a list of some of the hidden dangers associated with types of cards and what you can do to protect yourself:
Leaving the Balance Unpaid.
It is common knowledge that reward type credit cards are notorious for having much higher interest rates than typical non-reward cards. This means, that if you carry a balance on your account you will be liable to pay all of the additional interest rate in full.
These APR’s can range anywhere from 17% to 20% depending on the credit card company rate policies. What generally happens is the more rewards that you are able to get means the higher the interest rate you’ll have to pay.
So if you are usually carrying a balance, these extra charges you’ll be paying in fees and interest will offset the value that you’re getting from your rewards credit card.
The bottom line here is simple, if you are going to use a rewards card, don’t carry a balance on it or the perks and benefits won’t be worth it.
Letting yourself become penalized.
The credit card companies are always more exacting when it comes to penalizing you. For example, the over the limit and late fees will generally be much higher than non-reward cards. To make things worse, you run the risk of losing the ability to redeem your rewards if you are usually late making your payments.
You have got to spend more to get rewarded. There are many reward card holders that get a little excited and have the tendency to binge spend, so they can earn more rewards.
This is a bad habit and will set you back quite a few dollars. And when you try and earn more points by buying things that cost more and that you really don’t need in the first place, you’ll find yourself swamped with a bunch of bad credit that you defiantly don’t want or need.
Not reading the fine print.
There are many people that make the mistake of applying for a rewards card and don’t read the fine print. This is a bad idea because you run the risk of ending up with a high interest rate on your card and losing money in the long run. Make sure you take the extra time to read all of the terms and conditions before you go to town with your new card.
Now that the economy is on the upswing and the lending environment is getting better, credit card companies are making a comeback with their balance transfer deals. While balance transfer deals are making a comeback they are not as attractive as they were in the past. It’s really worth doing the math to make sure you’re getting a good deal. Here are the top 5 ways to make sure you’re getting the best deal.
Calculate the APR by including the balance transfer fee
Nowadays, almost all balance transfer cards come with a transfer fee of 2 to 5 percent. In essence, this makes a card advertising 0% APR for a year mean that the APR is between 2 to 5 percent.
The better way to look for these cards is by finding ones with a longer promo period like 18 months to two years. If your credit score is excellent, don’t accept anything less than a one year 0% APR promo period.
Look out for the “up to” offers
This means be wary any balance transfer offers that promise 0% APR “up to” anything. When you see an offer like this, it means that only the consumers that have superstar credit can expect to receive all of the advertised benefits.
If you are not located in the top tier you’ll end up getting a shorter promo period as well as a higher APR after the promo period expires. A better way is to only apply to these offers that have upfront and predictable terms.
Make sure you know what the long term card APR is
If your plan is to pay off your balance transfer inside of the promo period than you have no need to worry about the higher interest rate that follows the introductory 0% APR.
When you are searching for the best balance transfer card you’ll need to estimate how long it will take to pay off the initial balance transfer with payments you can make and afford.
You will also want to calculate the amount of interest that will accrue on your balance after the promo period expires. Only then will you really get a true 0% APR balance transfer deal.
Is there 0% APR on purchases as well?
This is a great added benefit, especially if you find a 0% balance transfer card with no fees and a long term intro period. On most cards the 0% purchase APR will expire well before the 0% balance transfer rate. This means that if you make a lot of purchases on your card and the purchase promo period expires, you will have a lot more to pay.
Look for a balance transfer card that offers a 0%APR on both purchases and balance transfers where the promo period ends at the same time.
Monitor the effect on your credit score
When your credit debts tie up a significant percentage of your available credit, this will affect your credit to debt ratio and that is nearly 35% of your overall credit score. You’ll want to keep your debt to credit ratio around 10 to 15% and always well below 35%.