With a bad credit and less than perfect credit history, getting a credit card with competitive features is not that easy. In this article we take a look at the 5 major drawbacks that come with a bad credit credit card.
1. High APR
With a bad credit credit card the interest rates are reasonably higher. Forget those 0% intro APRs- they rarely come with a bad credit credit card. So, keep your credit card balances low, to stop this high APR from burning a hole in your pocket.
2. One time processing fee
Some credit card companies charge a processing fee for people with bad credit who apply for credit card. This is generally charged by credit card companies due to the credit checks, other formalities and risk involved in providing a credit card to bad credit people. If you are going for a secured bad credit credit card then this fees can be waived, otherwise it has to be paid. The catch here is that credit card companies demand upfront payment of processing fee. But, a wise credit card consumer will find a credit card company which charges the fees to the credit card not demands cash in advance.
3. High annual fee
Keeping the bad credit credit card is definitely going to cost a lot in terms of annual fees depending on the credit report it can go in hundreds of dollars per annum. Bad credit credit cards with 0 annual fees offer is very difficult to find.
4. High late payment fee
Late payment with a bad credit credit card is severely penalized. The credit card companies charge heavy late payment penalties on repayment default and are very quick in reporting the default to credit rating agencies with a bad credit credit card.
5. Lower credit limits
Since, the credit card companies face increased risk in providing credit card to bad credit people, therefore the credit limits are lower. The credit limits can be increased with secured bad credit credit card and proper repayment of credit card balances.
These 5 factors related with bad credit credit cards increase the cost of owning one. Comparing various credit card offers, especially, when you have a bad credit will help you lower the interest and fees burden of a bad credit credit card.
