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Life can be tough without a credit card, as having one is often a requirement for doing things like booking travel arrangements, renting cars and shopping online. But for consumers with bad credit ratings, the process of applying for a credit card can be fraught with financial peril, and unsavoury credit card companies may try to exploit consumers in this compromised position. This can make it near impossible for even the most fiscally responsible consumer to build their credit or even own a credit card. If you have a bad credit rating and are looking for a new credit card, here are some of things you should look out for.
Sneaky or exorbitant fees
Credit card companies may try to charge you a wide variety of fees, especially if you have bad credit. Credit card companies can charge an annual and monthly fee, fees for requesting credit limit increases, even fees just for accepting your application and setting up your account. Combined, these fees may leave you little to nothing of your credit limit to spend on actual purchases, leaving you better off had you not applied for the card in the first place.
Credit card marketing scams
Be especially wary of credit card companies that offer "easy" or "guaranteed" credit. These are usually fraudulent or illegal as no one can guarantee credit; legitimate credit providers will always check your credit report before deciding whether to give you a card. These companies will usually try to charge you high fees, oftentimes before you accept or even apply for the card. One especially sneaky way that they might try to charge you is by getting you to call a '900' number; these numbers are not toll-free and can cost anywhere from $2 to $50 or more.
Short grace periods
The grace period for a credit card is the amount of time that you have to pay off charges without having to pay interest on it. Look out for cards that offer grace periods shorter than a month; these cards will accrue interest even if you pay off your balance at the end of every billing cycle. A card without a grace period will accrue interest the moment you make a purchase.
High interest rates
Though having a poor credit rating will usually mean higher interest rates, you should still shop around to make sure that you are getting the best interest rate possible. Unsolicited credit card offers will often have higher interest rates than credit cards which you find through your own research. Also look out for credit cards with low introductory interest rates, as the rates may increase substantially when the introductory period ends or you make a late payment.
Having a bad credit rating does not mean you can never have a credit card. With careful research, you can find a card that can help you build credit for a better tomorrow.
Sneaky or exorbitant fees
Credit card companies may try to charge you a wide variety of fees, especially if you have bad credit. Credit card companies can charge an annual and monthly fee, fees for requesting credit limit increases, even fees just for accepting your application and setting up your account. Combined, these fees may leave you little to nothing of your credit limit to spend on actual purchases, leaving you better off had you not applied for the card in the first place.
Credit card marketing scams
Be especially wary of credit card companies that offer "easy" or "guaranteed" credit. These are usually fraudulent or illegal as no one can guarantee credit; legitimate credit providers will always check your credit report before deciding whether to give you a card. These companies will usually try to charge you high fees, oftentimes before you accept or even apply for the card. One especially sneaky way that they might try to charge you is by getting you to call a '900' number; these numbers are not toll-free and can cost anywhere from $2 to $50 or more.
Short grace periods
The grace period for a credit card is the amount of time that you have to pay off charges without having to pay interest on it. Look out for cards that offer grace periods shorter than a month; these cards will accrue interest even if you pay off your balance at the end of every billing cycle. A card without a grace period will accrue interest the moment you make a purchase.
High interest rates
Though having a poor credit rating will usually mean higher interest rates, you should still shop around to make sure that you are getting the best interest rate possible. Unsolicited credit card offers will often have higher interest rates than credit cards which you find through your own research. Also look out for credit cards with low introductory interest rates, as the rates may increase substantially when the introductory period ends or you make a late payment.
Having a bad credit rating does not mean you can never have a credit card. With careful research, you can find a card that can help you build credit for a better tomorrow.
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