Some years ago it was difficult to get credit after bankruptcy. Fortunately, times have changed: the biggest part of consumers is offered a new credit card in their first year after declaring bankruptcy. But be careful: people with damaged credit history can face with high interest rates and fees. We will tell you how to choose a plastic that will work best for you. Finding beneficial credit card offers is not difficult if you know where to look and what to look for.
Applying for a credit card after bankruptcy is in your interest: you will get an excellent chance to repair your credit. If you change your old spending habits that caused a problem in meeting payment obligations and make regular on time payments, you will build solid credit history that will serve you for a long time.
When it comes to applying for a credit card after bankruptcy, a lot of people seem to have one question: "What credit card to apply for - secured or unsecured?" Let's have a close look at both plastics.
Secured credit cards look and work like any other regular plastics. The difference is that you need to open and maintain a special savings account which acts as collateral for your credit limit. If you default on the payments, the funds in the savings account will be used to cover your financial obligations.
For example, you deposit $500 in a savings account. It means that you will have a $500 credit limit. If you default, the credit card issuer will use the money to pay off your debt.
Unsecured credit card offers, as it follows from their name, do not require any deposits. If a person wants to get an unsecured plastic, he or she just fills out an application form.
Unsecured credit cards for bad credit tend to have higher fees and interest rates in comparison with good credit cards. The reason is simple: the applicants are considered to be a high risk. But don't give up if this is the situation you find yourself in. Such banks as First PREMIER have designed a line of beneficial bad credit cards that will make the process of building credit more pleasant.
The decision which credit card to choose - secured or unsecured - depends on your personal needs and requirements. Keep in mind that it is easier to qualify for a secured credit card because the lenders won't lose money if you default on the payments.
If you want to find the most suitable credit card after bankruptcy, the next step you need to take is making a list of criteria in order to narrow down the choices. Use your own criteria or consider the following ones:
- Low interest rate. The interest rates offered after bankruptcy range between 9.25% and 23.99%. Just because you have bad credit it doesn't mean that you have to pay the highest APR. By choosing the right plastic you can potentially save hundreds or even thousands of dollars depending on the balance you maintain.
- Application fees. The annual or setup fees can amount several hundred dollars and eat away much of the credit. So carefully calculate the finance charge you will need to pay.
- Credit reporting. Make sure that credit card issuers regularly report your payments to the major credit bureaus. That lets you build positive credit history. When you prove your ability to repay credit, you can qualify for more beneficial credit card offers.
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