You will find types of credit cards which may be useful for repairing credit in case you have a low credit score history or are in need of credit restoration.
In this article, we tackle three credit card for poor credit which may be popular available in the market today, understand the difference of one from the other, and decide which credit card is right for you.
A secured credit card immediately requires the submission of a cash deposit. The amount of deposit can range from around $200 to as much as $500. Some secured cards require a much higher deposit, particularly secured credit cards for business.
The credit line extended to a secured card holder often depends on the amount of security cash deposit. Keep in mind that in the event of default, the issuer can use the security deposit to pay for the past due debt. Therefore, if you want a credit card with a higher credit limit, you must be prepared to submit an equally high deposit as well.
Unsecured “Bad Credit” Cards.
Just like secured cards, approval for an unsecured credit card is not based on the applicant’s credit history or credit score. Even those with bad credit or no credit can easily acquire an unsecured “bad credit” credit card. What makes it different from a secured card is the fact that no deposit is necessary.
Nevertheless, because no deposit has been provided, issuers of unsecured ”bad credit” credit cards may impose higher interest rates and fees to make up for the losses. Before signing up for an unsecured card, compare your options and find the issuer that offers the most reasonable deal.
Prepaid credit cards.
Prepaid credit or debit cards can be used for payment like any regular credit card. However, prepaid cardholders do not enjoy a credit line like regular cardholders do. In order to use the prepaid card for payment, the card holder must first submit a deposit into the debit account.
However, when the balance runs out, the card holder must make a new deposit or reload the account to use the card for new purchases. Purchases are immediately paid using the funds in the account. Therefore, prepaid credit cardholders do not need to worry about payment due dates and interest rate charges.
The answer will depend on your personal needs and lifestyle. If you can afford to submit a security deposit, then you may consider a secured credit card. However, if you need to get a credit card in a hurry but do not want to submit cash deposit, then you may want to consider an unsecured bad credit card. Consumers are generally advised to go with a secured card rather than a prepaid credit card because the latter can prove to be expensive. Although prepaid cards do not impose interest rates, a prepaid card can be costly because of the fees (ex. Set up fee, maintenance fees, per transaction fees, etc.)