Credit cards are issued subject to the credit rating of the applicant. Many popular cards with low interest rates are reserved for those with a solid financial track record. Those with past money problems may find it harder to get standard products and may be better off looking at unsecured credit cards that are specifically designed to help those with bad credit. What are the pros and cons?
What are Unsecured Bad Credit Credit Cards?
This kind of product basically works in much the same as any other credit card in terms of how it is used. It is, however, given to people with a less than perfect credit score. Those with bad or poor credit and those yet to build a credit record often find it difficult to get approval from many card issuers. Having no real financial history or a track record of problems may see some applications rejected out of hand. This kind of product may work as an alternative.
What are the Advantages of Unsecured Adverse Credit Cards?
These products may simply offer people the chance to:
- Access credit cards even if their credit history is impaired or non-existent.
- Apply for finance without the need for full/any credit checks (i.e. with guaranteed acceptance products).
- Build or improve their credit score through responsible use of their card over time.
For many, this kind of card seems like the only option open to them. But, before applying for a bad credit card, it may also be worth looking at the downsides.
What are the Disadvantages of Unsecured Adverse Credit Cards?
Bad credit credit cards can come with some disadvantages. For example, applicants may find that:
- Not every card issuer will approve every application automatically.
- There may be fees and higher interest rates involved than with cards offered to those with good credit.
- Credit limits may be set at lower rates at least to start with.
- Taking out a high interest card when there are existing debt problems may lead to further difficulties in the future.
Unsecured bad credit credit cards may not be the only option worth looking at and there are some alternatives that may suit some people better. Secured cards, for example, may come with similar advantages and may be worth considering before making a final decision.
As with any financial product, remember to compare cards, offers and rates before making applications as this may help get the most cost-effective solution. This can often be done easily and quickly by using online credit card comparison services.
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
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