How to Re-establish Credit With, "Bad Credit" Credit Cards
If you have ever experienced financial problems such as a bankruptcy, foreclosure, tax liens, collection accounts, judgments, or legal action you may find yourself having to re-establish your credit. When your credit is ruined it does not mean that it has to remain in that shape. Sometimes it takes some time to get your credit back to an acceptable status.
Non-standard fees
One way to re-establish your credit is with a, "bad credit", credit card. This type of credit card is for those that have had credit problems in the past. When ever you apply for this card the first thing you notice is the number of fees associated with the account. Some of the fees you incur are an annual fee, account set up fee, program fee, monthly maintenance, and a monthly servicing fee. These fees are non-standard fees that you may not find with a regular credit card, with the exception of the annual fee. Some bad credit card cards will impose a fee every time your credit limit is increased. Some of these fees are assessed as soon as your credit card is approved and the credit limit is reduced by the amount of the fees. For example if you have an account set up fee of $29, a program fee of $95, and an annual fee of $48 and your credit limit is $275 your available credit will be $103. Subtract the total amount of the fees, ($172), from the credit limit of $275. A program fee and an account set up fee are one time fees so once you pay off your balance you should not see these fees again. Make sure you do not go over your credit limit when your card is received and you begin making purchases.
Standard Fees
In addition to the non-standard fees you also receive standard fees such as late charges and over the limit fee. If you are past due twice in a six month period or for two consecutive months the annual percentage rate could increase to a default rate in the area of 19 to 29 percent. You will also incur a transaction fee for cash advances.
Interest Rate
The interest rate on a bad credit card can be excessive as well which will cost you money in finance charges. When you make your payment more of the payment is absorbed by finance charges instead of going to the principal balance.
Pay History
When you have paid your monthly payments for a period of one year you have the opportunity to receive a credit card with better terms and conditions.
Source
http://www.creditcards.com/matrix/bad-credit.php
Published by Melvin Richardson
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