OK, for whatever reason your credit is in the dumpster. You
need or want a credit card to make purchases online or somewhere
where cash is not applicable. I'm not going to tell you not to get
a credit card, even though a debit card will do in 99% of the same
situations. Or what they call a secured credit care where you
prepay the amount of available funds to use.
I'll give you all the facts, and then you decide what's best for
you. Many companies that offer unsecured credit cards for bad
credit people are owned and operated by the same parent company.
They advertise and operate under different names but the terms and
conditions are exactly the same.
Here's a list of typical terms, fees, and rates for an
unsecured credit card for bad credit people:
The initial minimum credit limit will usually be at least $250
Fees that will be billed to your first statement:
- Account Set-Up Fee of $29.00
- Program Fee of $95.00
- Annual Fee of $48.00
- Additional Card Fee of $20.00 per card (if applicable)
- Monthly Participation Fee of $7.00
Total initial Fees billed on first statement: $179
If you are assigned the minimum credit limit of $250 your initial available credit will be $71 ($51 if you select the additional card option).
Here's the penalties and APR:
- Basic APR 9.9% on purchases and cash advances
- Grace Period 25 days
- Min. Finance Charge $0.50
- Late Fee $29
- Overlimit Fee $29
- Foreign Purchase 3%
And you can bet if you are late one payment they will raise
that APR to the highest allowed by law (which is 30% in most
states). So one misstep and you will pay dearly. Unfortunately
this is true of most credit card companies. In fact you don't even
have to be late, they just may raise your APR for the extra
revenue.
So for $179 dollars in fees you can get an unsecured credit
card for bad credit. And you'll have a whopping $71 available
until you pay your first bill. Does that sound like a good deal?
You can walk into almost any local bank and get a debit card for
about $30 in fees and deposit your $250 and have a lot more
available funds and less cost.
Or even the upfront deposit (secured credit cards) only average
about $60 in initial fees. The unsecured credit card for bad
credit fees are incredibly high. You may find one $20 cheaper but
we didn't when we checked.
The only possible reason this might be agreeable is that you
want to build your credit score and need to start somewhere. This
type of account can be managed properly and created a new positive
credit reference on your credit report.
Regardless of what kind of credit instrument you
choose, always carefully review the terms, fees, and any penalties
clauses before you sign. The devil is in the details and the
credit card companies are experts on extracting the maximum fees.
This is how they make their money and they are very good at it.
