Problem Credit Cards

Having bad credit won't prevent you from getting a credit card, but it will make it more difficult. Struggling with less than perfect credit? These cards are designed to help.

Like everything else you buy, credit has a price tag and it pays to comparison shop. With the Internet, you can now compare local credit offers with those from financial institutions around the nation.

Equal Credit Opportunity Act

The Equal Credit Opportunity Act protects you when dealing with anyone who regularly offers credit, including banks, finance companies, stores, credit card companies and credit unions. When you apply for credit, a creditor may not:

  • Ask about or consider your sex, race, national origin or religion
  • Ask about your marital status or your spouse, unless you are applying for a joint account or relying on your spouse's income, or you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington)
  • Ask about your plans to have or raise children
  • Refuse to consider public assistance income or regularly received alimony or child support
  • Refuse to consider income because of your sex or marital status or because it is from part-time work or retirement benefits

You have the right to:

  • Have credit in your birth name, your first name and your spouse's last name, or your first name and a combined last name
  • Have a co-signer other than your spouse if one is necessary
  • Keep your own accounts after you change your name or marital status or retire, unless the creditor has evidence you are unable or unwilling to pay
  • Know why a credit application was rejected-the creditor must give you the specific reasons or tell you how you can get them if you ask within 60 days
  • Have accounts shared with your spouse reported in both your names
  • Know how much it will cost to borrow money

How to Get a Credit Card if You Have Bad Credit

Bad Credit

  • Apply for credit cards at smaller retail stores. Sometimes these companies are more willing to give you a chance. If your application is accepted, make a small purchase and pay at least the minimum payment every month and on time. (If you pay more than the minimum payment, you won't pay as much in interest charges.)
  • Go to your bank, savings institution or credit union. If they already have your business, they may be more willing to give you a credit card.
  • Apply for a secured credit card if all else fails. You will be required to open and maintain a savings account as security for your line of credit. Your credit line will be a percentage of your deposit.
  • Ask a friend or family member to co-sign for a credit card. Remember that their credit counts as well, so choose someone with good credit. If you can't pay back the loan, they must, and it will appear as a blemish on their credit rating.

Tips & Warnings

  • While you are trying to get a credit card, keep paying all your other bills on time.
  • Once you get a credit card, you'll start getting offers for other cards in the mail. Be wise: You should have no more than three credit cards - one or two with a small credit limit and one with a larger limit for emergencies.
  • Don't get a credit card from a single store or chain of stores. Use Visa, MasterCard, Discover or American Express, as these are widely accepted.
  • Do not get a credit card that has an annual fee. There are lots of credit cards available that don't charge annual fees. If you are denied credit, by law the issuing company has to tell you why. Request a copy of your credit report to see what is in it.
  • Don't overspend. Use your credit cards to your advantage. Only buy something that you can pay for in cash. This will keep you from buying more than you can afford.
  • Many credit cards carry interest rates of 18 to 21 percent. If you cannot pay off your balance every month, you are spending more than you can afford and need to stop using your credit card until you can pay off the balance.
  • Credit card interest is not tax deductible.

Debit and ATM Cards

Donít confuse debit cards with credit cards. Debit cards may look like credit cards, but they act like checks. Once the debit card is used, the amount is immediately deducted from your checking or savings account. The debit card eliminates the need for carrying cash, but it does not extend credit. Debit cards may be used as guaranteed check cashing cards. In contrast, credit cards defer your payment until you are billed.

Some cards can be used to withdraw money from automatic teller machines (ATM). Beware of fees eating up your money if you use your ATM card frequently for small withdrawals. Some financial institutions charge their customers a set fee for a certain number of transactions. Other institutions charge for each ATM use. If you get cash at an ATM machine that is not part of your financial institutionís network, the fees could be as much as $6 per transaction.

Parents might want to introduce their children (ages 13 to 17) to prepaid debit cards such as Pocket Card, American Express Cobaltcard, and Visa Buxx, by funding a card that has a spending limit established by parents. Parents supply the funds and can use the cards to teach their children how to track how the money is spent. This parent-controlled card is designed to help parents teach their teens about using credit in a controlled environment.

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