People have bad credit for a variety of reasons. Some individuals simply never learned the basic of financial responsibility. Other may have lost their job, suffered a medical mishap, or incurred some other personal circumstances that cause them to be late with payments. Whatever the case may be, many card issuers do not offer “standard” credit cards to people with bad credit.
Credit card companies that do offer these cards for people with bad credit charge very high interest rates, fees and penalties. Although it’s possible to function without a credit card, having a card sure makes certain aspects of your financial life easier—whether you need to rent a car, reserve a hotel room or make an online purchase.
Here is some information on the best credit card for bad credit.
Capital One Secured MasterCard
Issued by Capital One under the auspices of Mastercard, it’s an actual credit card that can help you rebuild your credit. When you apply for the card, you must pay an annual fee of $29. The, you must pay a security deposit ranging from $49 to$200. You will receive a $200 spending limit. The security deposit functions as collateral for your obligations on the credit card account.
Depending on your credit history and credit worthiness, you can receive an increase on the credit limit increases—up to $3,000, without the need to pay an additional security deposit.
The issuer reports the payment history to the three major credit agencies.
First PREMIER® Bank Credit Card
This is also a credit card that can be used at establishment that accepts MasterCard. You must have a checking account to apply for this card. The bank charges a processing fee. If approved for the First PREMIER® Bank Credit Card, you receive a $300 credit limit.
First Progress Secured Card
You must have a checking account and the card requires you to pay a refundable security deposit of $300. You can be approved with any credit score. The First Progress Secured Card issuer does not charge application or processing fees. Like the other secure credit card options, the issuer reports the account activity to TransUnion, Experian and Equifax each month.
BuyRight Prepaid MasterCard.
If you cannot get a secured credit card at this time, you can apply for one of the many prepaid cards available. The BuyRight Prepaid MasterCard, which is issued by the MetaBank, provides the flexibility you need for online bill payment. You pay a $9.95 activation fee to use the card for the first transaction. The card has a rewards program when using the card for purchases at specified businesses, such Starbucks or iTunes. You must pay a $7.95 monthly fee for the card.
The answer to what is the best credit card for a bad credit situation is undoubtedly the Capital One Secured MasterCard or one of the other secured credit card options. As long as you pay the bills on time and keep the balance below the credit limit, you will raise your credit score over time, which should enable you to qualify for unsecured credit cards at much lower APR and fees.