What to consider before you apply for a credit card for bad credit
Often the cards targeted at people with poor credit have very high interest rates – 30-70% APR – yet are marketed as a way to improve your credit score and help you get your finances on track. While it’s true that such cards can be cheaper than high cost credit like payday loans the debt can prove to be very expensive and difficult to pay back.
If you feel you need to take out a credit card like this because you can’t make ends meet without access to credit, or if you’re considering taking one out so that you can keep up repayments on other debts, be careful. These may be signs that you need debt advice rather than a potentially expensive credit card that could increase your debt.
What are credit cards for bad credit?
Credit cards for bad credit, sometimes called ‘credit-builder’ credit cards, tend to have lower spending limits and higher interest rates than normal credit cards.
You might assume that the fact a firm is willing to offer you a credit card means that the risk is manageable for you. However, many people who have had a ‘credit builder’ credit card feel it actually made their financial situation worse rather than better.
If you need help in managing your debts, or want some support in knowing how best to handle credit, contact us now for free, impartial advice. We’ll help you explore various options for managing your finances.