Best Credit Cards For People with Bad Credit

Are Bad Debt Credit Cards a Realistic Option?

Jul 22, 2009

The Internet is awash with adverts for "credit cards, bad credit" but for some this type of credit card may be part of the solution to their debt problems.

Many of the bad credit credit cards which charge a much higher rate of interest, are advertised on the basis that they can be used as a tool to repair a person’s credit score. Of course if prompt payments are made and the credit card balance is kept below the limit this will help to build a better credit profile.

Paying the full amount owed is always a good idea, particularly with a high interest card. However credit card companies love people who only pay the minimum amount each month as it adds massively to company profits.

Bad Credit, Credit Cards

Credit cards for those with bad debt are also promoted to those with no credit history. This group might include those who are new to the country, are students or those who have never applied for credit before. Getting credit can be just as difficult for people who fall into these categories.

Credit Card Interest Rates

A trawl of mainstream credit cards, at the time of writing, show interest rates ranging from 6.8% to 16.9% APR, these rates are typical but variable and come with conditions attached.

Credit Cards For People With no Credit History

However credit cards for people with bad credit or those with no credit history are expensive and there is much less choice. Interest rates are considerably higher than other cards. For example one card company (Vanquis) is charging a variable rate of between 39.9% and 59.9% APR. Monthly interest for purchases at 2.84% and for cash withdrawals and credit card cheques 3.43%. Of course there will be no interest charges if the bill is paid in full and on time.

Interest Free Period

This particular card allows up to 56 days interest free, on purchases only, but only where the cardholder has paid off two or more consecutive current statement balances in full and on time. (Vanquis Visa Card, site accessed 22/7/09)

Another similar credit cards for people with bad debt is, Capital One Classic Visa Card which offers a lower rate of interest at 34.9% APR typical, variable (site accessed 22/7/09)

If people have doubts about their credit score, before applying for any financial product it’s worth getting a copy of their credit report from one of the three major UK credit reference agencies, Experian, Equifax or Callcredit.

If for example there is adverse information on the report that is inaccurate it may be possible to have it removed. Its removal might then improve the credit score meaning a lower interest rate credit card can be applied for.

A higher credit score would allow people to consider a range of credit cards, for example:

The information in this short article is not exhaustive and does not constitute financial advice.

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The copyright of the article Best Credit Cards For People with Bad Credit in Personal Budgeting/Finance is owned by Neil Gunn. Permission to republish Best Credit Cards For People with Bad Credit in print or online must be granted by the author in writing.