When it comes to selecting a credit card, consumers are best advised to comparison shop to find a card to meet their individual needs. Opting for the first unsolicited pre-approved offer which arrives in the mail is not the ideal way method to use as it will rarely be the best deal. Likewise those with bad credit should be extremely wary of choosing a credit card specifically targeted to consumers with bad credit, as high fees and interest rates, often combined with restricted use, are not worth signing up for.
Credit cards that carry annual fees, monthly management fees, and imaginative extras such as charges to increase credit limits, dormancy charges that still feature on some U.K. cards, and exorbitant interest levels, are best avoided. In the U.S. the law stipulates that charges may not exceed 25 percent of available credit, but it still pays to ensure there aren’t any extras hidden in the small print. Consumers can still be caught out with fees for copy statements, phone charges, penalty interest rates, and excessive interest rates for cash advances.
Subprime lenders in particular target those with bad credit who are often desperate for credit at any cost. Delighted to be able to obtain a credit card, little attention is often paid to the terms and conditions. It is wise to check out a lender’s reputation before proceeding. Consumers with bankruptcies on their credit record, or those with bad credit scores, should consider some offers for unsecured credit cards as too good to be true, and study the small print in depth before paying for what they may come to consider a scam.
One particular example of a credit card which many consumers fell for is the Horizon Gold card. It carries a $500 unsecured credit limit without a credit check, something which should immediately send alarm bells ringing. Many customers who paid their $79 application fee only discovered on receipt of the card how useless it is, as it can only be used on the Horizon online merchandise shopping site that many accuse of selling overpriced junk. In a similar way the First Platinum Plus card for bad credit limits users to shopping on the First Platinum Plus online shopping site. Annual fees levied on the card come to $349.50.
Those with bad credit would be better placed by applying for a secured credit card from a reputable lender. Used responsibly secured credit cards can help to re-establish credit, thus allowing card holders to move onto unsecured cards. Although they carry annual fees they are often minimal.
Store credit cards are often best avoided, though often pushed by sales assistants offering an initial discount at the point of sale. High interest rates combined with low credit limits and restricted usage can result in a negative impact on credit scores for many users. The limited offers they carry are sometimes worth having but the majority of card holders would be better serviced with a good cash back credit card.
There is no getting around the fact that the best credit card offers are only available to consumers with good credit. It thus follows that improving ones credit is the best way to obtain the best credit cards. In the meantime consumers should comparison shop and always pay attention to the small print. If in doubt it is recommended to check for consumer complaints online before opting for a particular card, as all to often this is done after the event rather than before.