As more people use plastic cards to pay for things, chequebooks and cash are being used less and less. Debit cards are replacing chequebooks, and more people are using credit cards. Online shopping has made it more important to have a credit card. Most of the time, people with bad credit can't get a credit card. There are still ways for people with bad credit to get into or get back into the world of plastic.
Many companies offer credit cards to people with bad credit. This had to be done because people with low incomes or credit problems couldn't get a credit card with low interest and no fees. Risk-based pricing is used by many of these companies. This means that they offer different kinds of loans with different interest rates. Your credit score affects the rate they give you. So if you apply for one card and get turned down, you might be given another card with a higher rate. This is a great way for someone with a bad credit history to get a credit card for people with bad credit.
So what about people who have no credit or a very bad credit score? They might need to look at another kind of credit card for people with bad credit. There are a number of companies that try to sell to people like this. A "starter card" is what they give out. The interest rate on this kind of card is very high, and the amount you can borrow is very low. There are usually also a lot of fees that go along with these cards.
These credit cards aren't as good as most credit card offers, but a lot of people accept them. By using one of these credit cards for people with bad credit and following the rules, like making payments on time, your credit score will improve over time. This will give you a better chance of getting a credit card with a lower rate and better terms when you apply for it.
Some people have such serious credit problems, like a recent bankruptcy, that they wouldn't be able to get a starter card. If this is the case, a prepaid credit card, which is sometimes called a secured card, would be the only option left. The only thing they have in common is that they look like credit cards. To use them, you have to put money into them. With this type of credit card for people with bad credit, you almost certainly will be approved.
They work just like a Mastercard or Visa, but you can only spend the money you put on the card. Since you can't get into debt with these cards, the company that gives them out doesn't have to worry about much. Since the card issuer won't make any money from the monthly interest rates on the balance, they have to find other ways to make money. They can charge you a fee to apply, a fee every year, a fee to handle the card, or even a small fee every time you use it to buy something. Before applying for this kind of bad credit credit card, you should look into several companies because the fees can vary a lot.
Basically, this means that almost anyone can get a credit card, even if they have bad credit. It might take a little research, but it can be done.
