Prepaid cards are similar to cash. - Stockxpert
If you've had credit problems in the past but have since cleaned up your act, these cards may be right for you. How to apply for credit cards with not-so-great credit.
So you’ve missed a few payments, been late on some bills…Not great for your credit score. But that was years ago and now you’re caught up and ready to take on a new card. But which one?
A look at cards you might qualify for even with a less-than-stellar credit history:
- Secure credit card If you have the cash, you can get the credit. The card is secured with your money. You're required to place a certain amount in an interest bearing savings account, usually equal to your credit limit, or possibly 25 percent more. That way, the bank can go after your account if you don’t pay. If that happens, your account will probably be closed as well. Talk to a local lending institution. After about a year of on-time payments, you might want to ask the bank to unsecure the card. Meaning the lender takes your savings account out of the equation. That way you can put the money in a certificate of deposit or another higher yielding investment.
- Department store credit card Most store cards are fairly easy to qualify for. Many, like Macy’s require a FICO score of at least 500, which is pretty doable for most people. Just make sure you never carry a balance. Some store cards charge as much as 22 to 24 percent APR. After about a year of paying on time, apply for a Visa or Mastercard. It might be a low credit limit at first. But gradually, you can up that ceiling if you pay your entire bill on time each month. Look for credit cards that pay you back in the form of cash or gift cards.
- Prepaid Visa or Mastercard These are better than credit cards because you can never go over your limit. The company usually allows you to reload the card 24/7 either online or by phone. You can shop online, make travel or rental car reservations with the ease of a credit card, but with the certainty of cash.
How to make sure you never run into credit problems again:
- Treat your credit card as a convenience not as a lending tool. Think of plastic not as a way to spend endlessly, but as a way to spend only what you have. NEVER carry a credit card balance, and always pay on time.
- Set up an emergency fund. Three to six months salary is ideal. If the money is there you will never be tempted to put necessities on a credit card.
- Start saving! Put money away toward your dream home or an early retirement. Whatever you do, don’t get back into the vicious cycle of mounting credit card debt.
Copyright L. Marie Dubuque. Contact the author to obtain permission for republication.
L. Marie Dubuque - Based in St. Louis, Marie Dubuque is certified as a life coach. Her latest book, Emotional Spending: How to Break the Addiction is now ...
