This is the first question. How do the bad credit credit cards differ from any other credit cards? The answer is that they are going to cost more. The most important extra cost is a higher annual fee. Although many credit cards have annual fees, the bad credit card is going to have one that is quite a bit higher. The annual fee could range from around $35 to as much as $150. Of course, you would think that a little shopping around can hold this fee to the lower figure. The truth is that it is the ones with the higher annual fees that are going to be most likely to approve someone with real bad credit.

The credit limits will be much lower. Most of the cards will have a credit limit around $300 and the annual fee will be charged first which will reduce the available credit line right from the beginning. The APR (annual percentage rate) is going to be high also. The other operating fees will generally be much higher. These would be the late payment fee and the over limit fee. It is important to be aware of the higher APR and the high fees, but these fees will only apply when charges are not paid within the first payment cycle, or payments are late.

If your reason for getting a credit card is to repair your credit or establish good credit, the APR and late fees are going to be something you are going to want to avoid anyway. The fact that they are excessively high should just give you some added incentive. You really should not be looking for too large a credit limit either. Why take chances? So, in the end it is only the annual fee that really does matter. It is the cost you are going to have to pay to get the credit card and you need to decide if it is worth it.

This entry was posted on Thursday, February 1st, 2007 at 10:09 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.