Navigating today’s society without a credit card inside your wallet can be treacherous. Need a few gas after hours when the cash windows is closed? Forget it. Make an airline or motel booking? No can do. How about renting an automobile? Uh-uh. And you better forget about internet shopping, because there is no paper money slot machine on your PC.
Many people who would like to use credit have difficulties qualifying. The primary reason is that they have damaged their credit score by defaulting on a credit contract in the past, and therefore banks and other banking institutions consider them a bad risk, hence denying their application.
For those who wish to repair their bad credit with a brand new card, there are options available.
Secured Bank cards
A secured credit account, like a secured loan, is backed up simply by collateral–something of value which you say yes to surrender in case you do not make your repayments. In the case of a secured card, your collateral must be cash.
Some banking institutions will hold your cash in a “security” be the cause of up to a year. Meanwhile, you will occurs VISA, MasterCard, or other services to pay bills and make purchases, paying at least the minimum payment each month on your card balance. You will pay out additional fees for your secured card, including:
Interest on unpaid balance each month ranging from 9. 9% to 19. 9%
Account set-up charge ranging from $20 to $99
Annual fee ranging from $19 to $99
Program fee of up to $100
Past due payment fee of approximately $30 each time
Cash advance fee of $5-$10 each time you get cash from your card
More than credit limit fee if you exceed your own preset limit
Other miscellaneous fees
Meanwhile, if your bank is holding your initially paid cash in a “security” account, they may not be paying curiosity to you as they normally would for any conventional savings account. When the year is up, they may offer you an unsecured card, for those who have made your payments faithfully, and return your security deposit.
Other banking institutions or firms which issue bank cards might use your cash collateral to pay your monthly bill for you by immediate withdrawal from your security account, and allow you to load more cash into that account to maintain or raise your credit limit.
Any secured CC has a credit limit range, and in this range–$200 to $5000, for example–your credit limit matches the cash amount you put up as collateral. So if you deposit $500 as security, your credit limit will be $500. Note, however , that your financial institution may withdraw its fees using this amount, effectively lowering your credit limit.
To obtain a secured CC, you must meet the minimum requirements of your issuing institution, including:
Be 18 years of age or older
Be a U. S. Resident
Provide proof of citizenship such as a Social Security number
Have a physical address
Provide your delivery date
Banks are required by the Patriot Act to collect personal information such as your own birth date and social security number intended for identification purposes. Because some institutions use this information to inquire into your credit history, make sure that the card you’re seeking is a “no credit check” cards.
If you do not like the idea of having a chunk of cash tied up in a bank-account as security, you do have extra credit options.
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Prepaid Debit Cards
While not technically a credit card, a prepaid debit card is quite similar to a secured card in that you insert it with cash to determine your own limit on purchases–when you run out of cash, the card becomes non-active.
One drawback in using a prepaid debit card is that it will have no effect, either positive or negative, on your credit report. A secured CC, in contrast, can help repair your previous credit mistakes if you keep your obligations up to date; banks and companies which issue secured cards do report your performance to the credit agencies, while the prepaid debit card does not show up on their radar.
The many positive aspects involved in using a prepaid debit card include:
You can’t overextend your finances
The particular fees are lower than a card’s fees
Your cash is not tied up; you are able to spend what you load onto the
It is easy to obtain with no credit check
This doubles as a credit card in most situations
If you place importance on functioning towards a better credit score but usually do not wish to make a large outlay of cash to secure a credit account, there are unsecured, no credit check bank cards available.
Unsecured No Credit Check Bank cards
You may be thinking that getting an unsecured credit account with a dubious credit history is really as easy as opening up one of the countless pre-approved card offers you receive in the mail each day. If you have read the fine print on one of these offers, you know that pre-approval is contingent upon an acceptable credit investigation. In other words, these offers are usually only useful to individuals with good credit ratings who already have credit cards.
With a bad or nonexistent credit history, you will have to appearance harder for an acceptable credit card offer. There are several card programs designed especially for people like you, but they come with a high price tag. Once you have defaulted on a loan or various other credit program, you become a bad danger to a credit company. In order to counter the risk, the company will charge high fees for giving you a second chance at managing your credit.
Some of the fees you will encounter in an unsecured, no credit score checking card include:
Interest on your unpaid balance starting at 9. 9% annually and up
A one-time system fee–$100 or more
Annual fee which usually varies according to the issuing institution
Monthly service fee
Minimum finance cost, even if you do not carry a balance
Money advance fee, either a set amount or even percentage of your advance, whichever is usually greater
Late payment fee
Over limit fee
Monthly account charge (yes, in addition to the service fee in some cases)
Credit limit increase fee-as a lot as $25 for each increase
The fee roster and fee amounts can vary wildly on an unsecured, no credit check card, so make sure you shop around before committing to any particular program. In one finance company’s example, as soon as it deducts all applicable costs from an initial credit limit of $250, the actual limit is whittled down to $71. Pretty dramatic, isn’t this?
However , if you stay focused on your objective of rebuilding your credit score, limit your own credit charges to what you have budgeted, and above all, pay your bill on time each month, you will be able to obtain a lot more conventional credit card in the future as well as other affordable financing.