Wednesday, October 30, 2013
Credit Cards for Good Credit Compared to Credit Cards for Poor Credit
If you are reading this article you might be considering applying for a credit card. Submitting an online credit card application is the easy part. What is more difficult is choosing the credit card that will meet your needs. Don't limit yourself by refusing to learn the details about Credit Cards for People with Good Credit Compared to Credit Cards for People with Poor Credit. The more you know, the easier it will be to focus on what's important.Applying for a credit card with excellent credit gives the applicant the option to pick and choose the best credit card deals with 0% APR, low interest rate, no annual fee, cash back and rewards that will save a substantial amount of money. Also, credit card applicants with excellent credit can apply online and get instant online credit card approval within seconds of filling out their application. This situation is very convenient and beneficial because there is no need to wait for weeks to get an approval or denial from the credit card issuer.On the other hand if your credit is poor, it's un-likely you will be approved for the best credit card offers. Therefore, your credit card choices will be limited to certain credit card types such as secured credit cards and pre-paid cards. With a secured card, applicants are required to "secure" the line of credit on a card by using a cash collateral deposit that will then become the amount of credit available on the card. If an applicant secures the card with a $200 collateral deposit from his or her checking or savings account, he/she will have $200 in available credit on the card. Some cards offer additional credit over the collateral deposit.The funds for the pre-paid cards also known as stored value cards can be loaded from a checking/savings account or from ATMs. Prepaid card holders cannot go over their spending limit or credit line because they can only spend up to the amount of money in their account. However, secured credit card holders may be allowed to charge more than the available funds if they consistently pay their monthly credit card bills on time.Many of the best credit cards have excellent rewards and cash back program to save the card holders money. These rewards and cash back programs varies from getting up to 5% cash back whenever you make gasoline purchase or rewards such as bonuses for frequent flyer miles which can be used for free airline ticket or free hotel room. Maintaining a good credit score is essential as many banks use credit score models to predict the credit applicant's future ability to meet debt obligations. Therefore, having a good credit history is a good prediction of future credit obligation.Having bad credit can be very stressful but it is not the end of the road. There are several things that can be done to improve your credit score over time. One of the best ways to start the process of rebuilding your credit is to apply for a secure credit card that reports your payment history to the three major credit bureaus which are Experian, Equifax and Trans Union. Once you credit card history is reported without recorded late payment you will start to see a gradual improvement in your credit score over time. Another important factor is not to apply for too much credit within a short period of time.Secured credit cards are never declined due to bad credit and they are frequently used as a means to establish or re-establish credit. These credit cards are similar to a regular credit card because they carry the Visa and MasterCard logo and are accepted anywhere a regular credit card is accepted. The difference between a regular credit card and a secured credit card is that the money you are using to make purchases with the secured credit card is yours.All credit card applicants should familiarize themselves with the terms and conditions of the offers for which they have applied. It is important to have the knowledge of the interest rates for the card and also a clear understanding of the consequences of making late payments. Keep in mind that most secured cards charges an annual fee and have high interest rates unlike pre-paid cards that do not charge interest. Some pre-paid cards do charge annual fees. Knowing this information can help an applicant avoid getting into a worse financial situation and digging themselves deeper in debt.