Credit Cards for Bad Credit
In an economy that has many consumers seeking credit cards for bad credit, banks are tightening their lending standards. The Target Corp recently put out its earnings for the last quarter. In addition to suffering from sluggish retail activity, its earnings were hit hard by a $135 million loss it has to reserve to cover its rising delinquent credit card accounts. Tightening its lending standards is a means of survival for the company. As a result, less and less people will be eligible to open an account with the retailer. In fact, the company has stated that its focus moving forward will be to provide quality goods and services to its customers in its retail stores. The company will likely not approve an account for those seeking credit cards for bad credit. It is a trend that many other retailers, banks and lenders are following. Account delinquencies have caused institutions to decrease credit limits, increase rates and even cancel some accounts. American Express recently took the restrictions a step further. For their customers with continued unpaid bills, they are offering incentives to cancel their cards. It offered to pay those customers $300 to pay outstanding balances and close their accounts by the end of April. Those seeking credit cards for bad credit need not apply to American Express right now.
With all the restrictive lending standards being adopted by credit card companies, where do consumers turn when they need credit cards for bad credit? Credit card accounts are one of the ways consumers build their credit history and scores. You need a credit history to get credit. Those trying to improve their credit histories struggle to do so, because more credit is needed to do it. That is not to say there are not plenty of credit cards for bad credit, but they come with a high cost in the form of high interest rates. Most are well above 30 percent and come with hefty fees. Many consumers who have to choose cards with higher fees and interest rates find it difficult to stay on top of the bills, which then will adversely affect their credit scores and reports. A prepaid credit card is one of the best solutions for those looking for credit cards for bad credit. A credit card with a prepaid balance will not let consumers fall into the trappings of a regular card. The balance has been paid, so spending beyond means will not happen. And it will not let a consumer easily fall into debt. The consumer must pay for the card first, so it does not require a credit check. For those who want to use a credit card instead of carrying cash or a checkbook but are not eligible for a low rate account, a prepaid card may be just the ticket. Prepaid cards have an added bonus in that they train you to think about credit card spending differently, since it is your money paid up front. The downside to some prepaid credit cards is that they may charge a fee or do not report to credit agencies.
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by: barrywaters
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