Disadvantages of a credit card for bad credit
Posted on April 28, 2008 in the Credit Cards category
.Many people that have bad credit can still get a credit card with a bad credit card. While a bad credit card can be good for people who are looking to rebuild their credit there are some drawbacks to a bad credit card.
Here are a few drawbacks of carrying a bad credit card that you should be aware of.
* They will have a High Annual Percentage Rate (APR) - A bad credit card will have very high interest rates. For people that are looking to repair their credit they need to make sure to play the balance off, because of such high APR’s. If you miss payments the interest will just add up and you will be worse off and your credit score will go down quickly.
* They will have a 1-time processing fee - There are some credit card companies that will charge a processing fee when people who are applying for a credit card have bad credit. Usually this fee is charged because the company has done a credit check and wants to cover themselves because the person applying for the card does not have a good credit history. You can get this fee waived if you apply for a secured bad credit card. A processing fee will be a fee you have to pay before you receive the credit card. It is a good idea, if you have bad credit, to find a credit card company that will charge the processing fee to the card and does not ask for money upfront.
* They will have a high annual fee - Bad credit cards will have high annual fees. Sometimes they can be in the hundreds of dollars. It is very hard to find bad credit cards that have no annual fee.
* They will have a high late payment fee - If you make late payments on a bad credit card the penalty can be significant. The credit card companies will charge a high late fee and will also report the late payment very quickly to credit rating agencies. It is vital that when you carry a bad credit card that you do not make late payments.
* You will not get a high credit limit - The credit card companies that issue bad credit cards do not want to take a big risk on people with bad credit so they do not give them high credit limits.
While a bad credit card is one of the best ways to rebuild your credit you need to be aware of their drawbacks.
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