Editorial Policy

How To Get A Credit Card Even If You Have Bad Credit

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By Eva Norlyk Smith, Ph.D.
May 22, 2009

The universe of credit cards for people with poor credit has very different rules than that of ‘standard’ credit cards. First of all, most credit cards for people with bad credit start out with a very low credit limit. You will no longer be able to use a credit card to give your budget a substantial cash infusion-the lines of credit you initially will have access to are likely to be too low. Secondly, when taking on people with poor credit, credit issuers protect themselves by offering more stringent terms and charging considerably higher fees.

Does that mean that it’s not worthwhile to get a credit card if your credit score has fallen below average? No, there are still many good reasons to apply. But it is important that you educate yourself on what the limitations and costs are, and set clear goals for how to use the card to your advantage. To come out a winner, you need to learn about the new rules that apply, and then pick the card that best meet your financial goals.

Apart from convenience, the biggest reason to get a credit card when you have bad credit is that it gives you a tool to increase your financial discipline and planning skills. This in turn will help you to more rapidly rebuild your credit and improve your credit score.

There are three main categories of credit cards that cater to people with low credit scores. Read the sections below to learn more about each type and determine which best suits your needs. Then click on the link to learn more about that type of card, what it offers, and how to compare offers. You can also click here to go directly to our selection of credit cards that cater to people with bad credit.

Unsecured Credit Cards — These cards function like a standard credit card, but the typical credit line is much lower and the fees tend to be considerably higher. The main advantage of these cards is that they can function as a bridge card that helps you rebuild your credit faster. To learn more about unsecured credit cards, click here.

Secured Credit Cards — A secured credit card is backed by a deposit you make into a bank account, which serves as security for the card. If you default on your payments, the credit card company will use the money in the bank account to cover your debt. The advantage of a secured credit card is that it is easier to get approved, since your credit limit will initially be the same as your deposit. To learn more about secured credit cards, click here.

Prepaid Credit Cards — These cards are similar to debit cards, but unlike a debit card, you don’t need to have a bank account to get a card. You load money onto the card, and that is what you have to spend, no more, no less. These cards offer the same flexibility and convenience as standard credit cards, and they allow you to make payments over the phone, online, and in other situations where cash or a check are not convenient. If you think this might be the right card for you, click here to learn more.

Catalog Credit Cards — Also known as merchandise credit cards or shopping cards, these cards offer you a considerably higher credit line than the other types of cards available to people with bad credit. The catch is that you can only use that credit line to purchase products offered by the issuer of the card, similar to a department store card. There are many pros and cons to these cards, so if you are considering a catalog credit card, study the fine print carefully. To better understand the advantages and disadvantages of catalog credit cards, click here.