How to Get a Credit Card with Bad Credit

Don't Let Adverse Credit Get in the Way of Securing Finance

Nov 14, 2008
Asa Ghaffar

Pre Paid Credit Cards For Those With Bad Credit - Petr Kratochvil

An adverse credit history makes it harder to borrow money. Find out how to get a credit card with bad credit, regardless of past defaults and bankruptcies.

The adverse credit market has grown substantially in recent years so it is now possible to get a credit card with bad credit. Several specialist poor credit lenders have emerged who now offer credit cards for poor credit, albeit at a higher rate of interest than was once the case. The good news is that paying back debt punctually will help that person to qualify for mainstream financial products in the future.

Rate of Interest on Credit Cards with Bad Credit

In order to underwrite the higher risk of default, financial institutions charge a premium for lending to adverse credit customer. The interest rate on bad credit credit cards tends to be upwards of 35% in the UK. American lenders tend to offer a lower rate of interest, but impose higher charges. Although they involve putting up collateral, a secured credit card could help save the customer money.

Low Initial Credit Limit on Credit Cards for Poor Credit

Specialist bad credit card providers will offer a lower credit limit than they do to customers with an excellent credit rating. It is likely that a new customer will only offered a credit limit of $250. However, provided that the customer repays the balance punctually, their credit limit will be reviewed by the lender after a period of 6 months. Reliable repayments will also be reported to credit reference agencies.

Companies That Offer Adverse History Credit Cards

There are several companies that either offer or specialise in the market for adverse history credit cards. These include Capital One, Aqua Card and Vanquis. They all judge an applicant on an individual basis rather than setting rigid criteria, but the applicant is unlikely to be able to secure credit if they are already in an active debt management plan or Individual Voluntary Arrangement. Bankrupts should also wait until they have been discharged before applying for credit.

Pre Paid Credit Cards for Undischarged Bankrupts

There is no credit limit on a pre paid credit card, but it it has the same functionality as other cards.The first thing to note is that everyone will be accepted, regardless of their credit history. The new card holder loads money onto the card and only spends their own money. There is a fee for doing this, but no interest will ever paid as there is no credit limit.

Debt Not an Issue with a Pre Paid Credit Card with Bad Credit

The pre paid credit card prevents debt problems as there is no credit limit so no defaults can ever take place. It can be an ideal credit card for use abroad, especially in the United States where cards are a way of life. They are also useful for university as they help a student keep control of their finances.

It may have been a surprise to discover that people with adverse credit, even bankrupts, can get a credit card with bad credit. Learn from past mistakes and use credit cards for poor credit to build a new, better credit file for the future.