Bad Credit Credit Cards

As the economies of the world start to slow down we will shortly be seeing a major increase in the number of people with impaired credit ratings. While this can be for a number of reasons, some out of the control of the people involved, it can cause major problems when looking to set-up new bank accounts, loans and overdrafts. However, for many people the main problem will be obtaining any kind of credit card, but are there any options?

The increase in bad credit ratings has actually prompted the emergence of a new credit card market, bad credit credit cards, which are targeted at those who have been rejected for the more traditional credit cards, but still need access to a “flexible friend”. While there are drawbacks to such cards, for many people the advantages far out weigh any drawbacks. Some of the issues to consider are :-

Increased Set Up Fees

As there is obviously an increased risk that the credit card owner will default on one or more of their payments in the future, the credit card companies need to offset this against the charges they attach to these financial arrangements. The beauty of the set up fee is that once you have paid it then that is it, you will not have to pay it again.

Annual Charges

While there is a move in the traditional credit card market towards annual charges for those who do not use their cards on a regular basis, the bad credit credit card market has taken this one step forward. Most credit card companies in this area will charge a small annual fee on any cards which are issued.

Higher Interest Rates

As you would expect the main component of any credit arrangement is the interest rate charged, and as the lenders are taking on more risk in the bad credit credit card market they need to offset this with a higher interest rate. Rates will obviously depend upon the base rates at the time, but even with the increase many cards will still be cheaper than store cards which have long been top of the credit card interest charge tree.

In conclusion there are options for those in even the most desperate of situations, but due to the higher risk to the lender there will obviously be a higher charging structure. However, in this day and age a credit card can often be vital in many situations and many people with bad credit ratings feel much more comfortable knowing that credit is to hand when required.