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Bad Credit Credit Cards Explained and FAQ Borrower Questions
Bad credit credit cards have become a popular financial instrument with people that need to reestablish their credit. These cards can be very useful if used correctly, but they also have some flaws that consumers should be aware of before deciding to apply for a card.

Understanding what bad credit or high risk credit cards are, and how they should be used, will help you determine if this type of credit account is right for your financial needs.

What Exactly Is A Bad Credit Credit Card?

A bad credit or high risk credit card is a card issued to an individual that has a poor credit rating. Because these individuals have bad entries on their credit report, they are unable to establish credit with a conventional credit issuing company.

Will I Pay High Interest For This Type Of Card?

Yes. A high risk card will carry a much higher interest rate than a standard credit card. It is in the best interest of the consumer, however, to shop around with different credit issuing companies to find the best rate. Bad credit credit cards may carry interest rates ranging from 18 to 65 percent.

Are There Fees For Establishing This Type Of Account?

Many high risk credit issuing companies will require a small processing fee for establishing an account. Consumers should only opt for companies that have an initial fee, not recurring fees. You should also only expect to pay about $30 to $50 dollars for this fee. Companies that charge several fees to open an account should be avoided if possible. These companies will charge enough account opening fees to consume the entire available balance of your card.

Do I Have To Have A Bank Account?

While it is not mandatory to have a bank account, many credit issuing companies look more favorably on people that have bank accounts.

How Much Is My Opening Credit Limit?

Most bad credit credit cards start with a $300 credit limit. Over time, if payments are made in a timely manner, and the balance has not gone over limit, the balance will be raised. Consumers should verify that raising their credit limit will not incur any fees. Some high-risk issuing companies will charge a fee to raise your limit.

Will Having A Bad Credit Credit Card Boost My Credit Score?

Yes. Each time that you make an on-time payment on your new account, your credit rating will improve. Keep in mind, credit reporting agencies also look at the amount of credit that you have available on the account, and the amount that you pay on it each month. Always try to keep your balance at 30 percent or less than your available credit. When you make your payment each month, try to pay at least $5.00 above the minimum payment. Both of these actions will also help you improve your credit score.

Is There Anything Else I Should Watch For With These Types Of Accounts?

When you establish a high risk account, you must familiarize yourself with all the terms and conditions of the account. Make sure you know when your bill is due, and by what method of delivery you will receive your billing notice. Look for fees associated with late payments and over limit occurrences. Verify if there are membership fees, insurance requirements or annual fees associated with the card.

When you understand how the card works, you will be able to keep your account in good standing without incurring any additional fees. In the future, if you maintain your account properly, you will be able to apply for, and receive a more conventional card.

Updated January 3, 2014 – Your Source for the Best Bad Credit Is Ok Credit Cards

* See the online credit card application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the 'Apply Now' button, you can review the credit card terms and conditions on the issuers website.
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