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If you have little or no credit, finding a credit card can be a hassle or sometimes even seem almost impossible. Although there are credit cards out there for people with bad credit (these are called sub-prime credit cards), you need to be careful because they often have a lot of fine print, such as extra fees, and higher rates.
Any way you look at it, having bad credit IS going to cost you money, however the key is to find a card that has the least amount of pitfalls.
The goal should be use this card to start re-building your credit so eventually you can upgrade to a better card.
Before I go into more detail about these cards, and some pitfalls to watch out for, the best tip I can probably give you is to Always Read the Fine Print! – just trust me on this, especially when you are dealing with your personal finances and credit.
Watch Out For Fees!
The first thing you want to look out for when applying for a sub-prime credit card is an application or processing fee.
Most credit cards for people with bad credit have a non-refundable fee attached to them.
If your application isn’t accepted, you usually don’t get this money back. These fees can easily be over $100, so watch out. Some cards targeted at people with bad credit will claim that your “Guaranteed credit”. There is no such thing as Guarantee credit, so approach offers like that with caution.
And More Fees…
Another type of fee that credit cards for people with bad credit are notorious for are annual fees.
Remember how I said always read the fine print? Well some credit card companies charge ridiculous annual fees for these credit cards. If you are applying for a credit card that you aren’t going to use very often you really want to make sure your card has a very low annual fee or no annual fee.
Monthly maintenance fees are also something to watch out for, however these are usually under $10 a month. All of these fees will show up on your monthly statement.
Some companies will actually look at your credit and give you an annual fee based on that, so your your credit isn’t horrible you will may be able to get away with no annual fee.
If your credit is in shambles however you will probably end up having to pay an annual fee of some sort.
Credit Cards targeted at college students often have a pretty high APR and annual fees. These cards are obviously targeted at students with little or no credit history.
If you are a college student looking to build your credit, you want to do your research a find a card with a large company like HSBC, which will allow you to upgrade to lower rates once you build up your credit a bit.
When I first started building my credit I had a few cards that I rarely if ever used; however I still owed the credit card companies a good amount of money every few months because of the annual and monthly maintenance fees they would charge me.
I’ve said this a lot before, but you always want to do your research before getting a card especially if you want to use that card to save you money and build your credit at the same time.
Overall its all really about avoiding as many fees as possible. Credit Cards targeted at people with bad credit or no credit are going to have high interest rates, thats just a fact of life. However if you can manage to get a card with little or no fees, and use the card to start building your credit back up you should eventually get accepted for a better card.