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Bad credit card deals
targeting those with bad credit
By Lucy
Lazarony • Bankrate.com
 Imagine
a credit card with fees as high the credit line, an eye-popping
annual percentage rate, no grace period and stiff late payment penalties.
Now imagine having bad
credit or no credit and believing this offer is the best you
can get.
"Credit is an important safety
net. I would never deny that," says Linda Sherry, director of national
priorities for San Francisco-based Consumer
Action, a consumer advocacy group. "But if it costs you this
much, there has to be a better way to get it."
Experts say many consumers with
damaged and no credit are paying much more than they have to for
a credit card.
Fees
that swallow your available credit
"The fees on these cards can be so significant that it eats
up any reason to have one," says Bill Hardekopf, CEO of LowCards.com.
There's a card, for
example, that saddles you with charges upon account opening -- a
$29 account set up fee, a $95 program fee, a $48 annual fee, a $7
monthly servicing fee and a $20 annual fee for additional cards.
Assuming you got the minimum credit limit of $250, the fees would
eat $179 of your available credit in the first month, if you did
not get an additional card. If you charged more than $71 in the
first month, you'd be socked with a $29 overlimit fee.
Hardekopf recommends making a grid as you compare
the terms and conditions of each card. Note every fee charged by
cards in consideration to determine the best offer.
Next July, new
credit card regulations will take effect that limit the fees
charged by subprime cards. Fees can't take up more than half of
the credit limit during the first year after issuance. Those larger
than 25 percent of the limit must be stretched over the first year.
Experts say those with bad credit would be much
better off getting a secured card than paying these types of fees.
With a secured card, a consumer would make say a $250 deposit and
then receive a $250 credit limit.
Many secured cards charge at least an annual
fee, so it's a good idea to examine all the fees involved and shop
around for the cheapest deal.
For any card you consider, make sure the issuer
reports your payment history to the credit reporting agencies. Otherwise,
the card won't help you improve your credit score.
Beware credit
repair scams
Credit repair scams can be found almost everywhere in the mail,
in newspapers and magazines, tacked to telephone polls. They've
even migrated to the Internet. But experts warn there is no quick
fix when it comes to credit repair. Anything a credit repair outfit
can do you can do for yourself.
Experts say the first step to credit repair
is for consumers to get copies of their credit reports from the
three national credit bureaus of Experian, Equifax and TransUnion
and check for errors and omissions. Everyone is entitled to a free
copy of their credit report from each of the bureaus every 12 months.
Consumers can access them at www.annualcreditreport.com.
Negative, but accurate information can't be
removed from your credit report.
Check
your credit report
To request copies of credit reports consumers should contact:
- Equifax
P.O. Box 740241, Atlanta, GA 30374
(800) 685-1111
- TransUnion
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022
(800) 888-4213
- Experian
(888) 397-3742
-- Updated: Feb. 18, 2009
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