Bankruptcy Credit Card: How Choose One
There are many credit card issuers out there promoting what some people refer to as “bankruptcy credit cards” – that is, credit cards for people who have a bankruptcy on their credit report.
Of course, these credit card issuers target individuals with poor credit in general, not just those with bankruptcies – but for the purpose of this article, we will use the term “bankruptcy credit card”.
Most of the bankruptcy credit cards you see advertised are secured credit cards. If you are not familiar with a secured credit card, it’s “secured” by a special savings account you establish with the issuing bank which acts as collateral for the line of credit you receive with the bankruptcy credit card.
So how do you go about choosing a “secured” bankruptcy credit card? The first step is to come up with a list of criteria. In After Bankruptcy Credit Solutions I cover eight criteria you can use. When I apply the eight criteria, only a handful of bankruptcy credit cards are left – so it narrows it down to the better ones quickly.
There’s not enough space here to cover all eight of the criteria I use when selecting a bankruptcy credit card, so let’s focus on a few of them as a starting point:
1. Has Reasonable fees
What’s reasonable? Well, while researching some bankruptcy credit card issuers I came across one that charged a $120 application fee. Compare this to a number of others that charge no application fee at all! But that’s only part of the picture –you also want to make sure the bankruptcy credit card issuer offers an interest rate that is competitive with other issuers. This where comparison shopping, and making sure you are aware of every fee the card issuer charges, is critical.
2. Reports to the major credit reporting agencies
This is very important – if you want to rebuild your credit history, make sure the issuer of the bankruptcy credit card reports to the major credit reporting agencies: Experian, Equifax, and Trans Union. You also want to make sure the information is reported a certain way – in After Bankruptcy Credit Solutions, I go into detail on this.
3. Reports credit limits
Why is this important? If the bankruptcy credit card issuer does not report your credit limit, this could lower your credit score with some credit scoring models because they may automatically assume you are at your limit – even if you are using only 10% of the available credit line.
We’ve only touched on three of the eight criteria I cover in After Bankruptcy Credit Solutions. But, at the very least, it should give you a starting point when it comes to choosing a bankruptcy credit card.
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Best Strategies For Online Approval Of Credit Card Application
Credit cards had been a popular form of purchasing items on a "chargeable" or borrowed term.
The advantages of having a credit card are:
1. Security, since one does not have to carry a large amount of cash to purchase certain items.
2. Convenience. In case one has to purchase an item that is immediately needed (and is out of cash), these can be purchased using a credit card
3. Cash advances. Purchases that require cash payments may still be accommodated by the credit card through the cash advance feature. This works like a regular ATM transaction (with of course a corresponding interest rate)
1. Interest rate. Unlike purchasing with cash, credit card charges come with a corresponding interest (unless paid before the due date). The consumer should be aware of the various interest rates offered by the different credit card companies. One has to choose the mode of payment (plus the interest rate) that would best suit his or her capacity to pay.
2. Overuse. A consumer tends to purchase items that are not really needed or included in their budget if they have a credit card that is ready to use.
3. Annual fees. Whether one chooses to use his or her card, after activation, annual fees will be charged.
4. Other charges. A delay in the payment during one billing period would incur you additional charges.
Credit card online approval usually is far easier than manual applications that require various forms to be completed before it can be processed. The company likewise is more likely to receive your application on a shorter period of time as compared to snail-mailing your forms.
For a faster credit card online approval, take into consideration the following:
1. Do not leave any unanswered line, especially those marked with a red asterisk.
2. After completion of the online application, immediately send either through email or facsimile the additional requirements needed.
3. Take into consideration that credit card companies prioritize applications of the following group of people:
- married couples
- persons with a mortgaged house or car
- persons with several dependents
4. Choose credit card companies that have a promotional offer in the application process, chances are, promos are offered due to low application rate, thus prioritization your entry is a sure shot.
The logic here is that the more obligations an applicant has, the more they are likely to use the credit card, which equivalents to higher earnings (through interest charges) on their part.