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Tips For Choosing Among Credit Card Offers When You Have Bad Credit

Don’t let bad credit stop you from getting and using a credit card. Even if your credit rating has gone bad the last few months and you badly need a credit card, there are still companies who are willing to extend credit card offers to you. It's only a matter of finding what the different offers are and knowing the risks and benefits of each choice. Here are four kinds of credit cards you can use even with bad credit:

Unsecured credit card
This is often referred to as the 'bad credit' credit card, so named because it is only issued to people with bad credit. An unsecured bad credit card will still allow you to transact as usual, but there is a downside to it.

Bad credit cards, thanks to your less-than-perfect credit rating, will charge higher fees compared to other types of credit cards. This is probably the only credit card that will charge you as much as $150 in annual fees alone. Interest rates are also higher, sometimes as much as 20%. Banks and credit card companies also charge higher application fees. If you want this card, make sure you can handle the payments. If not, you'll be in danger of getting yourself deeper into bad credit.

Catalog credit card
These are cards that are offered by many online shops and stores to encourage you to buy from them. Usually, a catalog credit card may only be used in a particular merchant store. All your payments will be reported to a credit bureau and you'll also be given a credit line, the amount of which will depend on the issuing company and on how well you can meet their requirements.

These companies will not charge you an interest rate on any of the purchases you make. However, they will require that you pay a higher installment or minimum monthly balance.

Prepaid credit card
This type of credit card is perfect for your bad credit, in that it can help you limit your spending. It's also easy to apply and get approval for, provided you have enough funds for the application and processing fees and the maintenance fees (usually monthly). These cards will not help you rebuild your credit but they will help you live within your means. Choose one that has the lowest fees and cost.

Secured credit card
A secured credit card is called that way because you will need to make a deposit with the bank who issues it in order to get one. Depending on the bank, you can sometimes get a credit limit worth as much as 100% of your deposited funds. This type of credit card is effective for limiting your purchases. Better yet, you'll be using your own money and your deposit will earn interest.

You might think that secured credit cards totally defeat the purpose of a credit card and you're probably right. However, don't cross them out yet. Secured credit cards are a great way to rebuild your credit and still allow you to participate in cashless transactions. After all, you don’t want to remain in bad credit forever, right?

So which credit card should you choose when you have bad credit? That depends on what you want to do. If you want to rebuild your credit, get an unsecured credit card that offers a good interest rate, low annual fees and no application fees. It's also important that it reports to a major credit bureau. All your payments will be recorded and if you're never delinquent, you can gradually rebuild your credit over time.

If you only want a credit card that will tide you over for some temporary need, go for a prepaid or a secured credit card. As long as you can handle the monthly payments, these credit cards should help you get back on your feet once again.

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