5 Tips for Getting a Credit Card with Bad Credit

Getting a credit card when you have bad credit can be a major ordeal. These cards may come with a high annual fee. More than likely the credit card will hit you with extremely high interest rates. Regardless of your credit position, some type of credit card is probably available if you are willing to look hard enough and accept unfavorable terms.

Consider why you want or need a credit card.

If getting a credit card is to elevate your perceived social status, it is best to not pursue it until your credit rating has improved. Do not get a credit card if you see it as a way to increase debt when you already have severe financial issues. You may feel the need for a credit card to facilitate online shopping, hotel reservations, or car rentals. You may want to see if there are other ways to go that are better for you than a credit card that you may not be able to afford.

A credit card for convenience might better be replaced with a debit card.

Most people who can qualify for a checking account can also qualify for a debit card. If you can afford to rent a car, buy a hotel room, or make online purchases, put the money in your account and use your debit card for these transactions. If you open a separate account just for the debit card, you will not have to worry about the holds that some businesses put on the card for an amount above the purchase price. Costs for a debit card are nominal or free as long as you keep the account in good standing. The debit card will look like a credit card if impressing your friends is part of your goal.

If the debit card is not an option for you, see if a family member will get a card in his or her name that you can use.

Credit card companies will let people with good credit provide a card on the same account to another person. It will have your name on the card, but their name on the bill. Each month hen the bill arrives you will be responsible to provide the cash to pay the amount due or the balance of the card. Doing it this way will keep the account holder from being surprised if the bill is not paid regularly. You will need to be responsible or risk major damage to your personal relationship with this individual. If you have control issues with spending, let this person hold the card except when special needs arise for its use. Neither this option nor the debit card option will have much effect on your credit score.

Get a co-signer for the credit card.

For the co-signer, this can present a major risk. If you default on the card, the co-signer can have a major black mark on their credit by the time the problem is realized. It will cost the person a large lump of cash to resolve the problem because of fees and unpaid past interest on top of the amounts that were charged. The defaulted credit card will also leave yet another blemish on your already bad credit. On the other hand, proper use of the card can improve your lifestyle and your credit score.

Apply for a collateral backed credit card as a last resort.

The only positive thing about this type of card is that these companies can report a good payment record to the credit bureaus. Your credit limit cannot exceed the amount you have on deposit with the card company. Monthly payments only replenish your balance. These credit cards have high fees. Some are annual and some are monthly on the same card. You are actually paying someone excessive fees to loan you your own money. They still have the risk that if you do not maintain your payments faithfully, your credit can be tarnished more.