case against subprime credit cards
"We recommend that people look at secured cards,
"says Linda Sherry, director of national priorities at San
Francisco-based Consumer Action. "Try to compare them; see
what's out there." She recommends that consumers use Bankrate.com
Among other things, Bankrate's list of secured credit
cards shows two important things. First, consumers learn that a
$150 annual fee is absolutely ridiculous. In fact, of the 19 secured
cards listed on Bankrate, the highest annual fee is $69, and most
are $35 or less. Next, consumers will notice that six of the 19
cards have no annual fee; each of those cards is issued by a credit
"Credit unions are good places to look for secured
cards," Sherry says. "Many people don't realize that they
can join a credit union, but for people with damaged credit, they
can be a very good thing to get involved with. You can find out
which credit union you can join by using the credit
union finder at the Credit Union National Association's Web
To establish or rebuild credit, you need to apply for new credit. But a subprime card should be the absolute last resort. Shop around. Compare rates and fees. You may be surprised to find that you qualify for a regular, prime card. If you don't, then get a low-fee, low-rate secured card instead.
"For people looking to rebuild their credit, the secured card is best," Manning says. "The subprime card is simply a trap that ends up hurting them." And there's probably a fee for that as well.
Gregory Taggart is a financial writer based in Orem, Utah.