Bad Credit Credit Cards How You Can Avoid High Fees
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"Bad Credit" Credit Cards: How to Avoid High Fees
Overview
People with poor credit histories often face high mortgage, insurance, and car loan rates, making life frustrating. They also struggle to get approved for credit cards, which could help them rebuild credit. If you're facing this issue, one key step is to obtain a credit card specifically designed for bad credit?"just be sure to read the fine print carefully.
Understanding the Options
There aren't many credit cards available for those with bad credit, and they often appear similar at first. Most cards help by reporting to major credit bureaus monthly and offering a Visa or Mastercard for essential purchases. However, they can also come with hidden high fees. Here’s a closer look at some examples of fees found in the fine print.
Card Option 1
This card offers a low interest rate, which seems appealing at first. However, the fees add up quickly:
- One-time setup fee: $29
- Additional one-time fee: $95
- Annual fee: $48
- Monthly maintenance fee: $6
Total First-Year Cost: $244
Cost for Subsequent Years: $120
Card Option 2
This card comes with a higher interest rate, but the setup fee is only $29. Unfortunately, the other costs make it less appealing:
- Monthly maintenance fee: $6.50
- Annual fee: $150
Total First-Year Cost: $257
Annual Maintenance Cost: $228
Card Option 3
Available as secured or unsecured, this card’s fees are more reasonable, and it's based on the issuer's credit review:
- One-time setup fee: $0 to $49
- Annual fee for secured: $35
- Annual fee for unsecured: $39 to $79
- Monthly maintenance fee: $0
Total Potential Cost: $35 to $128
Making the Right Choice
It’s clear that not all bad credit cards are created equal. Card Option 3 stands out as the most consumer-friendly, offering substantial value without excessive fees.
Improving your credit history and score can lead to better loan rates, lower credit card interest, cheaper insurance, and overall savings. Rebuilding credit is challenging, but using a bad credit credit card wisely is both the fastest and most cost-effective method.
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© Credit Card Depot Inc. 2006
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