Tuesday, August 7, 2012

Subprime Credit Cards: The Smart Solution For Those With Bad Credit

When a person is saddled with bad credit, often he feels that there is no way that he can qualify for a credit card. However, that is not the case. So-called subprime credit cards, or credit cards for bad credit are actually readily available for people whose credit scores are not so stellar. While one with bad credit is not likely to receive approval from a mail-in credit card offer, there are still many different solutions available online.

Understanding Credit

Regardless of the reasons for your bad credit score, the fact is that there will be a time when getting a credit card is necessary for either emergency situations or general survival. While the idea of a subprime credit card may be unappealing at first, for many people it is the only option. And, with properly regulated spending habits, the use of a subprime credit card can actually help you improve your credit score over time.

How is this possible? A person's credit is calculated based on a number of factors. Chief among these factors is that person's prior lending behavior and access to a line of credit or cash. In this way, a credit card can actually help your credit score since it gives you access to cash. Also, by using your card each month and responsibly repaying it in full (or at least in full over the course of a month or two) you will show future lenders that you are capable of managing your money better than you did in the past.

Why a Subprime Card?

Since you have bad credit, finding a deal for a typical unsecured credit card is tough. The traditional banks that offer these cards are not likely to freely lend to you. Therefore, for many borrowers with bad credit, a subprime credit card is their only option.

However, this does not mean that your interest rate needs to be sky-high. In fact, the average credit card interest rate right now is set at about 14%, any rate that is reasonably close to that mark is therefore acceptable. Many subprime companies may also start you at a higher interest rate, such as 18% and then lower your rate once you prove to be a reliable credit card user.

Get Fast Answers

By using an online application, determining what subprime credit cards you qualify for and at what interest rates can be achieved within a matter of a few hours. Sometimes you can even get your response as fast as within a few minutes. Subprime credit card companies work in the same manner as traditional lending institutions in that respect.

When you are looking for a subprime credit card, however, remember that due to the passage of the Credit CARD act, no company is allowed to charge you a fee to sign-up or activate your card. Therefore, anyone who asks for such a fee is probably scamming you or breaking the law. Either way, don't work with them.

Focus on the Future

Though right now the reality of your bad credit seems like a nightmare that you cannot wake from, there is actually a light at the end of the tunnel. Through the responsible use of a subprime credit card, designed for those with bad credit, you can actually improve your credit score over time. As a bonus, you will be able to have the freedom and peace of mind provided by a credit limit in your pocket for the time being.

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