Do you have less than stellar credit? If so, you probably know just how difficult it is to get a credit card. If you've looked, no doubt you have found plenty of companies out there, like you can see on the right of blog, that will offer to help you rebuild your credit rating by issuing a credit card. For some people, it is worth it to get one of these cards - even with interest rates around 20%. Just be very careful, because there are extremely high fees involved. Here is what you should know.
Most credit card companies who issue cards to people with bad credit leverage their risk by charging outlandish fees. If you are truly trying to repair your credit, these may be a good option for you. If you are looking for a credit card that you can use immediately, take a closer look. Most of these credit card companies start you off with a low credit limit of around $250. That could be enough to get you out of a bind if you have an unexpected expense. However, these credit card companies charge some pretty hefty fees just to issue you a card.
The first fee that most credit card companies charge is an application, processing or program fee. This can be anywhere from $100 to $150 or more. Most charge a monthly fee of around $10. Then there is the annual fee of around $50. All of this is charged up front, upon approval, and before you even make a purchase. For our calculations, we'll use the best-case scenario. With a $250 initial credit limit, subtract $100 for the program fee, $10 for the monthly fee, and $50 for the annual fee. That's $160 in charges before you make a purchase on your credit card. In our best-case scenario, that leaves you with an available balance of $90 on your new credit card. If the program fee is $150, that only leaves an available balance of $40.
There are other fees you can expect to see each month. Most of these credit card companies require that you have your payments debited directly from your checking account each month. This is not necessarily a bad thing. It will help you pay on time and avoid late payment fees. However, there is a charge for this “service”. It's usually around $10 a month. That's in addition to your monthly fee. If you make a late payment, or if there are insufficient funds in your checking account, you will have to pay a fee of around $35. In addition to the late payment fee, your interest rate will be increased by an average of 5%, and if this causes you to go over your credit limit, another $35 will usually be tacked on.The whole idea of these credit cards is to rebuild your credit, right? Most of these credit card companies will increase your credit limit when you pay on time. In the fine print though, you'll find that this will cost you around $25 every time you have an increase. You may or may not be able to control whether or not the credit card company raises your limit. Most will increase your limit every six months. This brings the annual cost for your credit card to around $440 for your first year, and that's if you don't have any penalties; and before interest is charged.If you are trying to get some quick money, and you have bad credit, opening a credit card account for people with bad credit is probably not a great idea. If you are truly trying to rebuild your credit, just understand that it will cost you to do so. You will have to endure high fees that eat up your available credit. You will have high interest rates. And you will have high penalty and monthly fees to contend with. With time and persistence, you will be able to rebuild your credit and get a credit card that does not charge you so much.
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People With Bad Credit CAN Get Credit Cards Too
Why I Still In Love With Credit Cards
A conversation from five years ago:
“Today,” said a college freshmen friend, “I’m going to cut up all my credit cards, and never use any of them again.”
“Huh? Why?” I asked.
“Because I can’t stop using them! It’s getting me into a big pile of debt!”
“Oh please. That’s just silly,” I said as I dismissed her opinion, “it can’t be that bad.”
Two years and $10,000+ of my own debt later, I thought to myself: Hmm, maybe Deanna was onto something after all.
Most people know this fact: credit cards, when used irresponsibly, can land your booty in a pit of messy debt. Without credit cards, I probably would have been less in debt, perhaps in the ranges of a few thousand instead of ten thousand — but let’s face the fact, I would have been in debt regardless. It was 99% me and 1% credit card; the credit card didn’t magically swipe itself.
But despite everything, I still love credit cards. I rarely carry cash and I swipe my card on almost everything. Yes, even when purchasing $0.49 chewing gum. In fact, I buy pajamas with pockets just so I can have the credit cards with me while I sleep!
You might ask: what are you, a moron?
Although the answer is a convincing yes, that isn’t the reason why I still love credit cards.
I’ve been paying my purchases in full since I dragged my behind out of debt, and it has been years since I had a finance charge on my credit cards due to purchases.
I’ve racked up enough reward points on my American Express card to keep my subscription to the WSJ going for the next six years; I’ve also gotten enough cash back via my Citi Dividend Card to pay for months of broadband service, and I’ve earned hundreds in interest through various 0% balance transfer offers.
All these rewards and benefits of credit cards came about at the simple and “easy” price of responsible credit card usage. Pretty sweet, in my opinion.
On the Other Hand…
The average undergrad student has about $2,200 in credit card debt, and about one in twenty American households owes $8,000 (or more) on their credit cards. Statistically speaking, if you’re a college student — you probably have (or had) credit card debt.
Credit cards aren’t exactly a consumer friendly financial product. From high interest rates , two-cycle balance calculation method, to fees upon fees — it can be very easy for people to fall into the credit card trap. It’s little wonder why many people advocate avoiding credit cards.
You Don’t Have to Love Them Too
Just because some online nut job loves his credit cards enough to blog about them — doesn’t mean you have to get on the bandwagon too.
There are plenty of people that have stopped using credit cards due to the potential financial trouble credit cards may cause them — and that is perfectly okay. If you have serious doubts about your ability to use a credit card wisely and decided to forgo using them regularly — chances are, you’ll be fine.
Credit cards are not the only way to build credit (although they may be one of the simpler way). Even so, you do not need to actively use your credit card to build credit. You especially don’t need to carry a balance to build credit.
And let’s face it — earning points, rewards, or cash back is entirely pointless if you’re paying hundreds or thousands in finance charges.
However You Want to Swing It
If you manage your budget wisely and spend responsibly but are put off from using a credit due to the numerous horror stories, you may be doing yourself a disservice. Of course, if you use credit cards daily without understanding the cost associated with them, you may be putting yourself in financial risk.At the end, regardless of how you feel about credit cards, having a full understanding of their pros and cons can benefit you immensely. After all, it’s entirely silly to love or hate something without really knowing it.Love them, hate them, or don’t really care? You can vote on the top right of the blog.
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Overview Of Chase Freedom Credit Card
Yeah so the blog’s previews (& other upcoming post) takes about a few decade to become a full review… but you know, good things comes to those that wait etc. etc.
If you’re the cable news TV type, you may have noticed the ape-crazy advertising campaign that Chase has set up for the Chase Freedom Credit Card. In fact, as far as I can tell, the Chase Freedom ad is also aggressively marketed on many online news site.
The gist:
- A cash-back credit card that can be converted to earning points, depending on customer preference.
- 3% cash back (or points) for every $1 spend at eligible Gas, Grocery, and Quick Service Restaurant purchases.
- Quick Service (as in fast food joints), but this may also include places such as sandwich, bagel, and coffee shops!
- 1% cash back (or points) for every $1 spend elsewhere.
- Save up $200 in cash back and get $250 back! (Essentially 3.75% or 1.25% cash back, depending on purchases).
- Maximum of $600 in purchase within a billing cycle for the 3% category.
- Cash back expires in 36 months, while points expire in 60 months.
Pros:- 3% cash back may be as good as it gets for now.
- 3% cash back for trans fat filled burritos, burgers, fries, and donuts! Oh my!
- 3.75% cash back for those that are patient.
- No more two-cycle billing method.
- New Chase site allows for easier cash-back claim and switching to point.
Cons:
- High interest rate: 14.24% APR for good credit, 18.24% APR for moderate, and finally 23.24% APR for marginal credit. (Prime rate are high these days).
- 3% international purchase/transaction fee. Yuck.
- It’s another freaking credit card in your wallet.
by stopbuyingcrap.com
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