Get Approved for a Low Interest Credit Card
Credit is something that is difficult to live without. It allows us to buy things that we simply could not afford if we had to pay for it in cash. While it is certainly true that most American families carry at least a small credit balance from month to month, some individuals have, perhaps, taken their spending a bit too far.
This happened to me when I was in college. All of a sudden I went from not having any money to having credit card companies fighting for the chance to lend me money. I thought I had hit the jack pot.
Seriously! How cool was it that I could buy something now and not pay for it until much, much later?
Unfortunately, credit card debt is not something that should be taken so lightly. In you are attempting to rebuild your credit after years of neglect, then you know how difficult it can be. With that being said, here are a few things you need to consider when you evaluate a credit card offer.
Credit Cards for People with Bad Credit
First of all, you need to realize that using credit cards is an expensive way to borrow money. The last report I heard had the average interest rate somewhere around 18 to 20%. Recent pressure has begun pushing this number down somewhat, but the interest rates are still entirely too high in most areas. As such, it is often a good idea to shop around before deciding on one credit card versus another.
Interest Rates and Annual Fees – Perhaps the easiest way to evaluate a credit card offer is to compare the available interest rates and annual fees for each card. What I generally do is simply multiply my outstanding balance by the stated interest rate for each card being considered. Let’s assume, for example, that I have an outstanding balance of $1,000. If the difference in the interest rates between the two cards is 2%, I could save around $20 per year by going with the smaller rate card.
Many people would stop here; which would be a big mistake. It is important that you take into consideration any annual fees that are charged by the credit card companies. In our example, let’s assume that the card with the smaller interest rate charges a $30 annual fee, while the other card does not charge anything. This may, of course, change your mind as to which card is the better deal.
Grace Period – Another thing that many people fail to consider is the grace period offered. The grace period is the amount of time in which you can pay your bill in full and not incur any interest charges (think free money). If you get paid on a weekly basis, having a credit card with a 30-day grace period may be much more beneficial that a card that has a 25-day grace period. The trend, unfortunately, is moving towards shorter, or completely eliminating, grace periods.
Transaction Fees – This is, perhaps, the fee that I hate most. Transaction fees are small fees that you are charged each time you use your card; whether you charge $1 or $1,000. I absolutely refuse to use a credit card that imposes transaction fees. I figure that they already get enough money from me in the form of interest charges; why give them more of my hard-earned money.
Additionally, you will need to consider whether or not the company charges over-the-limit fees if your outstanding balance exceeds your available credit. The best credit cards for people with bad credit do not hit you with ridiculous fees and penalties and typically agree to work with creditors; instead of seeing you only as a revenue source.
With that being said, the best credit cards for people with bad credit are those that have a low interest rate, no annual fee, and offer a 30-day grace period. Anything less than that can often make your financial situation worse.