Do You Know the Signs of Credit Cards to Avoid?
Posted by admin on Jun 17, 2009
Do you have bad credit? It can be tough to get credit cards when you have a poor credit rating. You’ll find that it’s far easier to get a card that will make your situation worse, than a card that will make your situation better. Predatory lenders capitalize on your limited choices and your desperation to trap you into high interest, fee ridden credit card agreements that will add to the amount of debt you carry and make it hard to dig your way out. These are the top signs that certain credit cards are predatory:
* Ridiculously high interest rates. People with bad credit are likely to have to pay higher interest rates no matter what, but predatory lenders’ rates are jacked up well above the market average. Do an online search to determine what legitimate lenders charge for credit cards for bad credit, and refuse any offers that are significantly above that level.
* Monthly or weekly fees. Legitimate credit cards never charge weekly or monthly fees, and only rarely charge annual fees. When a credit card comes with weekly or monthly fees, you can be sure that its line of credit is tiny. Predatory lenders do this so your line of credit will rapidly be eaten up by fees instead of by charges. You barely get to use your card before you’ve reached your limit, and the lender gets to extract money from you for the privilege of not using its card.
* Loans or applications that require fees up front. It’s illegal to charge a fee before a loan is actualized, so if a company asks you to pay before it approves you (even if it swears that approval is guaranteed), turn it down and report the company.
* Unethical (and possibly illegal) billing practices. Predatory credit card companies sometimes try tricks like mailing you a bill on the bill’s due date, meaning that by the time you get the bill, your account is already past due. Close your account for your own safety, and start sending in payments on your own, without waiting for the bill to arrive in the mail.
These are only a few of the signs that a credit card lender is predatory. Do your research well and thoroughly before you start looking for credit cards that will accept borrowers with bad credit. You are in a sensitive financial position, and you need credit cards that will help you to improve it, not dig you deeper into debt.
The owner of the credit cards is accountable for all balances, which should be paid off in full each month to avoid paying interest and fees. Some consumers in this country, however, only pay the minimum payments each month. A recent index showed that the repayment of outstanding balances on credit cards in December 2008 declined to 16 percent, the lowest since 2004. With the current economic downturn, it is expected that there will be an increase in consumers failing to pay their credit card bills. The economy has left consumers feeling uncertain about their jobs, retirement accounts, real estate investments and financial futures.
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Here’s how to tell the good student credit cards from the bad ones.
* Check the interest rate. The offer is good if the annual percentage rate, or APR, is equal to or only a couple of points above the going rate for a regular credit card. Avoid student credit cards with higher interest rates. Also stay away from credit cards with a default rate that is noticeably higher than a regular credit card’s default rate.
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Interest rates will also be higher. Prepaid credit cards for bad credit require a minimum deposit to secure the card; this deposit also becomes your credit limit. The best thing about this type of credit card for bad credit is that it is risk free; you cannot possibly truly go into debt because you will be drawing down on the amount of your deposit whenever you use the card. Regardless of the type of card you choose, be sure the issuer reports to all the main credit bureaus so that all your hard work to rebuilt your credit does not go unnoticed by potential creditors.
Be sure to educate yourself with all the terms and conditions that each of the credit cards for bad credit offer.
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