How to Choose a Credit Card for Bad Credit
There are a couple easy credit cards to qualify for, namely those offered by Orchard Bank. FICO scores as low as 500-600 have qualified. However, if you’ve just come out of bankruptcy, have a lot of debt or have a really, really low credit score, you’ll probably be limited to two options:
Prepaid debit cards. While these often seem like a good option, they won’t help your credit score, and they may have a lot of hidden fees.
Secured credit cards. These require you to post collateral upfront, usually equal to your credit limit, and may have higher fees than you’re used to seeing. However, they’re generally the best way to rebuild your credit score.
When you have bad credit, there are a few things to watch out for:
- Hidden fees. This is a major concern of prepaid debit cards, which can charge for anything from ATM withdrawals to using the debit card to annual fees. Read the terms and conditions carefully!
- Processing fees that count against your credit limit. Some secured credit cards will charge you an upfront fee that reduces your credit limit from what’s advertised.
- High annual fees. Most secured cards have them, but the Applied Bank card, for example, charges a whopping $119 a year. Orchard Bank, on the other hand, waives the annual fee in the first year.
- Bankruptcy credit cards. Watch out for scams that target people with bad credit with promises of instantly erasing your credit history or providing a lifeline loan with a sky-high interest rate.
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