Bad Credit Credit Cards Can Reestablish Your Credit Rating
Posted 08/17/09
Millions of people unexpectedly found themselves without jobs during the economic collapse of 2008 and 2009, due to circumstances totally beyond their control. Due to this sudden loss of income, they were unable to meet their monthly mortgage, loan and credit card obligations. As a result, the number of people filing for bankruptcy protection rose. People who had the power to purchase almost anything they wanted just a few months before were powerless to do anything but sit back and watch their good credit rating slip away.Historically, one of the repercussions of bankruptcy has been that the debtor would be unable to obtain credit for at least seven years after filing for protection, rendering major purchases such as applicances and cars impossible. For those who want to get back on their feet and reestablish their good credit rating, there now are secured, or bad credit credit cards to help them on their way. Bad credit credit cards are not meant to be an easy fix for the irresponsible, however.
Bad credit credit cards require an upfront deposit and allow a very low credit limit to start. By using the card to make small purchases, an individual can pay the balance off monthly and gradually build their credit rating back up. Then, once a good payment history is established, the lender may gradually increase the credit limit and eventually switch the customer to an unsecured card.
This may sound like a dream come true, but there are cons to bad credit credit cards along with the pros. Some cards charge exorbitant fees in the first billing statement that can eat up the entire credit limit. They will also frequently charge high interest rates that can themselves eat up the credit limit and generate over limit fees and charge interest from the moment of purchase, rather than allowing the usual one month grace period.
If you do your research well, however, bad credit credit cards can be a valuable tool for reestablishing your credit rating. Just be sure, whichever card you choose, that the company reports to all the major consumer credit bureaus. Otherwise, all your good intentions will go to naught. Also remember that bad credit credit cards are only a tool to help you get back on your feet and not a permanent solution. If you can find a card that reports to the major credit bureaus, does not charge unreasonable fees to establish the account or sky high interest rates, and offers a grace period for interest on purchases, then you are well on your way to building your credit history back up.