All You Need To Know About A Bad Debt Credit Card |
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If you are one of those people who have got bad credit ratings and a bad credit history, you have landed yourself in pretty dire straits. That’s because with a bad debt history, you will not be issued a credit card, and you are absolutely handicapped when it comes to online shopping, booking tickets, renting cars, or even building up your credit ratings. Credit cards offer different forms of unsecured loans to you when you shop or withdraw using them. Sine the loan is unsecured; the credit card company has no recourse to your assets in case you default on the payments. The only option left for credit card companies in these situations is to take legal action against the defaulter, and this generally does not give them the desired results. That is why; a credit card company makes sure that it gives credit cards to people who have a good credit score and credit history. Which brings us back to the original quagmire, that is, once you have bad debt, how do you get a credit card in order to improve your credit ratings? So if you have bad debt, then you will not be able to qualify for a regular credit card. However, help is now at hand with a lot of credit card companies offering bad debt credit cards to people with a debt history. While these cards encourage people to improve their credit ratings, they generally come with strict rules and policies so as to discourage defaulters. A lot of these cards nowadays offer rewards and bonus points while others come with no annual fees or a 0% APR within the first year. When you apply for a bad debt credit card, you are required to submit detailed information regarding your salary and employment history etc. This is standard procedure in such cases since the credit card companies want to be sure that you are mending your ways and will not default on your bad debt credit card. Bad debt credit cards can be broadly divided into two—secured and unsecured. A secured bad debt credit card works like a prepaid credit card. Many companies will offer you a secured credit card only, whereby you are required to deposit whatever amount you wish to be charged to your credit card. For example, if you deposit $1000 in your secured credit card account, then you can draw only up to $1000 on your card. As you can easily make out, this is not exactly a credit card, since you have already paid up your balance, but the good part is that you can at least use it for all kinds of credit card purchases, and are not left handicapped when making a transaction where only credit cards are accepted. The other variety of bad debt credit cards are unsecured credit cards, which actually work like regular credit cards and the company does extend you credit .However, in the case of bad debt credit cards, the credit limit for unsecured cards is generally very low(less than $1000).This is just a way for your credit card companies to cut losses in case such a situation arises. If you seriously want to re-establish your credit history, then these cards are a good option for you since many of them directly report to credit rating agencies. If managed wisely, they can go a long way in improving your credit ratings. |
