As so many single parents know all too well, it is incredibly easy to get bad credit and very hard to get rid of it. Once you’ve got credit that is not as great as it could be, in addition to the obvious issues like trouble getting home or car loans, it’s also difficult to get regular credit cards of any type. Of course, many financial experts say that everyone should should have one major credit card, just in case…plus, have you ever had to rent a car without one? It’s not easy, not fun, and more expensive to use your debit card to do so. Fortunately, there are several banks that specialize in extending credit to people with a poor credit rating, and there are several options to choose from.
A secured card is almost identical to the regular debit card that you probably have with your bank. In essence, you are opening up a bank account in order to get a credit card. This type of card will typically charge an annual fee, as well as a high interest rate. The amount of your available “credit” is the same as the amount of money that you have paid up-front, minus any extra fees the companies charge. However, some of these cards do report to one or more of the credit agencies, which will allow you to gradually improve your credit score. Generally speaking, people with a very poor credit rating are most likely to benefit from a secured card. This is because as your credit score decreases, it becomes even harder to get credit. The same is also true of pre-paid cards, which are often just debit cards, and therefore will not be mentioned here.
Some of the most common banks that offer secured cards, as of November 2010, are:
1) REMOVED USELESS PLACE
2) Public Savings Bank offers to waive your interest rate for the first six months, and has no annual fee or monthly fees, with certain limitations. They really do not seem to care at all, about your credit, but do report your account information to all three major credit bureaus. To learn more, visit their website at https://www.publicbankcard.com
3) Orchard bank is unique in that you can apply online for a credit account with them. When they check your credit, they will let you know which of their cards would be best in your specific credit situation. If the secured card is most appropriate for you, you can open your account with only a 200 dollar deposit and a 7.90% variable purchase APR. The annual fee is 35 dollars, but that will be waived the first year. For more information, visit them at http://www.landing.orchardbank.com
As with any type of credit card, other fees, including returned check or late fees, may apply. If you have had an account in good standing for some time with your local bank, they may be willing to open a secured account for you. In some situations, you would often pay less both in fees and interest if you chose to work directly with your bank.
Co-signed Credit Cards
You have probably heard of co-signed credit cards. Basically, when you have someone co-sign for you, their name goes on the account, along with yours. If you do not make the payments on time in the way that you say that you will, they are held responsible for them. As a result, the person that does this will have to really trust you, so if you think a parent, sibling, or dear friend would be willing to help you, this would probably save you a lot of frustration. Because you will be charged less interest on a card for someone with good credit, there is also the potential to save money while your credit improves. Typically, this person would usually have to have very good credit in order to qualify, and it might be a good idea to determine in advance who will be receiving the statement.
If you ask, the bank you choose might be willing to send duplicate bills, or you could sign up for electronic billing, so that you would both have access to the due dates. Virtually every bank that offers credit cards will allow co-signed cards. Your regular bank will probably do that as well, so it might be worth asking next time you need to speak with them. If they are one of the rare banks that will not, they might be able to point you in the right direction of an institution that does.
It is important to understand that this situation may be only temporary. If you continue to make good choices, and do what you can to improve your credit, one day you will be able to get offers for credit cards, bank loans, and other types of credit again. You have the ability to decide how long it takes to better your credit report. After all, a credit report is just a list of debts and assets, that simply shows how efficient you are at paying your debts on time.