For a person with bad credit, getting a credit card can be very difficult. In these situations, a bad credit credit card may be a good option. These cards typically have a low credit limits, and many need to be secured by actual funds. Often, the risk taken by the company that gives out the card is offset by fees charged for having the card. For many people, a bad credit credit card is the first step back on the path to having a normal credit card and good credit.
A bad credit credit card usually works like other credit cards. These cards are accepted anywhere other major credit cards are accepted. It is almost certainly a good idea to pay the balance off in full every month, even if this is not required. Many companies that provide bad credit credit cards advertise that they report to major credit bureaus, which is intended to improve credit quickly as the card holder uses the card appropriately. This can help build credit history for people who have none, but people with no credit history often have more options than people with bad credit.
One kind of credit card sometimes available to people with bad credit is called a secured credit card. With this type of credit card, the company that is offering credit keeps a deposit on the card that can be taken away in case of delinquency. Often, the deposit is at least as much as the spending limit on the card. This kind of account can be good if one has no other options, but it can also be expensive in the short term.
There are a variety of low-limit credit cards that are appropriate for people with bad credit and people getting a first credit card. These cards are often unsecured, meaning that a deposit is not required. Usually, with help from a banker, these cards can be obtained in connection with a bank account. Students, in particular, often have a very good chance of getting a low-limit credit card when opening a student account.
When getting a bad credit credit card, it may be a good idea to consult with a banker at a physical bank location. Credit card terms and the way in which credit is built can be confusing. A banker can discuss one's options in detail and provide information about improving credit. He or she may even be able to point out a way to get a credit card that does not charge fees or require a deposit.
It is important to remember that a bad credit credit card does not protect a person against engaging in the same habits that resulted in having bad credit in the first place. In fact, if credit card debt has in the past resulted in serious debt problems, even having a bad credit credit card is probably not a good idea without a strong support network. Education about how credit works and how to spend responsibly is important when trying to overcome bad credit. Although a bad credit card can provide a place to start, it can also make problems significantly worse if it results in more debt.