Bad Credit Credit Cards
What Do You Mean By Bad Credit?
Bad credit results from the poor credit score or bad credit rating that generally reserves from a number of incidents. These incidents include missed payments as well as late payments on credit card bill, other loans or interest agreements and other household bills. The credit score represents the risk that lender assumes while extending credit to the borrower and poor credit means that the risk of the lender extending credit is very high and thus needs to be compensated in any way.
Bad Credit Credit Cards:
The bad credit credit card is offered by the credit card issuer to the person having a bad credit history and hence needs compensation in the form of higher interest rate and also certain annual fee. Since the risk involved in lending to the person with bad credit is very high and also the interest rate is mean of compensating for the higher risk, the credit card issuer is required to charge a higher rate of interest on credit card for bad credit. The credit card for bad credit is offered by many companies that are risk takers and willing to assume additional risk by extending credit cards for people with bad credit.
Banks Offering Credit Card Bad Credit:
Among the banks that are offering credit cards with bad credit, Capital One and Citibank are worth mentioning. Let us now take a look at both of them:
1. Capital One offers the bad credit credit card with an annual percentage rate extending up to around thirty percent. However, Capital One does not charges annual fees and provides the credit limit of ₤2,500. As an additional benefit, the cardholder gets internet fraud guarantee, online account management and the option of choosing a design of your choice.
2. Citibank offers very competitive terms on its credit cards bad credit by having an annual percentage rate of around twenty two percent. The credit limit that Citibank offers on its bad credit cards extend up to ₤3,000 with a fifty six days interest free period, but it charges three percent fee and minimum payment higher than what other banks require (3%).
The question that remains here is that how to transfer credit card balances with bad credit? For the convenience of bad credit card holder, Capital One offers balance transfer rate of around thirty percent while Citibank offers zero percent balance transfer rate for initial three months. There are some financial institutions that offer bad credit unsecured credit cards and free bad credit cards, but these institutions have their terms and conditions so as to secure themselves especially while issuing unsecured credit card for bad credit.
How To Improve Credit Score Through A Credit Card With Bad Credit:
The bad credit credit cardholder can improve the credit score by not making excessive purchases on credit card and paying off the bills in timely manner every month. Even though the interest rates charged on bad credit credit cards are high, but the cardholder can avoid high charges of interest if the bills of credit card are paid within due date. After showing a good credit record for a year or so, the bad credit cardholder can apply for the conventional credit card with lower rate or can even transform that bad credit credit card into the one with lower interest rate by simply calling the issuing bank.
