Unsecured Credit Cards for Bad Credit 2018
A credit card is similar to a debit card. However, instead of removing money directly from the user’s checking account when making purchases, it is taken for a short-term loan. This loan may accrue some interest depending on the repayment method.
For purchases made in a given billing cycle, you will be given a small grace period before the payment is due. If you repay the balance before that date, then there’s no need to pay any interest. However, if you repay an amount that is less than the entire balance, then you will accrue interest on the average balance.
Why You Should Use Unsecured Credit Card for Bad Credit
Credit cards come with a multiple of benefits, perhaps the most important aspect is that it will help you build your financial score. The good financial score is vital for your future because you will be able to access other loans like mortgage at favorable rates. It can also help you acquire utility services with ease and insurance at a low premium.
Apart from building your score, the card has several benefits some offer travel rewards and you can redeem them in the future. Depending on the loan, it could have travel or shopping benefits which could save you money. Before you choose to get a loan, it’s important to know all the benefits and features of the loan.
Secured and Unsecured Credit Cards
There are two types of credit cards – secured and unsecured. Secured loans are usually backed up by cash deposit or collateral which is equal to the loan limit. This is a good option for people who have not built a solid financial history. These types cards are not similar to normal prepaid cards. However, you will make payments in a similar way to the unsecured loan. Unsecured loans, on the other hand, are not backed by any type of deposit or collateral. You will be given a credit limit based on your income level and your previous history. You loan funds will deplete once it is used to the limit.
How Grace Period Works
One of the main advantages of using a loan is that you can get an interest-free loan for a short period of between two to three weeks. Any purchases made within the grace period are interest- free until the payment due date. If you do not pay your balance in full before the grace period is over, you will be charged interest on the daily balance.
Ways of getting loans with a poor credit score
- Use eligibility checker to find out if your loan is approved
- Choose a credit card that is designed specifically for less than stellar credit scores
- Make regular payments to improve your credit score
- Clear balance before the end of each month to avoid further interest charges.
The cards are designed for people who do not have good reports. Bad debt usually carries a greater risk, and lenders tend to lower the credit limit. You will be joined with several lending specialists in our group who will help you access credit facilities and improve your debt worthiness by demonstrating how you can manage to balance monthly payments and balances. You can build up your score by obtaining a loan from reputable lenders in our network.
It is vital that you research before settling for one. According to Forbes, when looking for a good credit card, always look at the features of the loan before you take out some cash. The lending experts in our group will not use poor credit score against you; you will be given options that you can choose to suit your needs.
How Are Interest Rates Calculated?
Many people assume that credit card interest is evaluated on the balance after payment due date. However, if you do not pay your balance before the said time, then you could accrue interest rate on your daily balance each month. To avoid accruing huge interest, you will be required to pay the new balance on your credit card statement and this minimum payment is to keep you in good standing with your lender. However, it is important that you repay the loan on time to avoid complications such as accrued interest rate.
How Will Credit Cards Affect Your Score?
Credit cards can affect your overall score in numerous ways. Before dealing with specifics, there are five common factors that are used by lenders to determine your score. These include payment history 35%, length of debt history 15%, loan utilization 30%, new loan 10% and type of account in use 10%. Using credit cards can affect your score either positively or negatively. You can positively enhance your score by making payments on time and repaying your loans all the time.
A late payment may not be reported within the first few days but once it is reported to the bureaus, it will affect your score negatively. Debt utilization is the percentage of your credit limit that you are using at a given time, and it’s advised that you should keep your debt balance below 30% of your advance limit. The ages of previous and current account will amount to your credit history. A longer debt history is better, however, if you have an unsatisfactory score, do not be worried. Begin slowly and develop slowly and as time goes by, you will be able to improve your score.
What Is EMV Chip?
With the rise of financial fraud globally, EMV chip is a microchip that is embedded in your credit card. Not all cards are equipped with the chip. It is essential that you consult your lender on the possibility of including the chip in your card. The chips have two card verification systems – chip and pin, and chip and signature. Chip and signature cards are popular in the United States and you use the signature to verify purchases. On the other hand, chip and pin are used in Europe and they require four to six-digit pin for verification. Chip-enabled cards are more secure than Magneto stripe card and they transmit data between the terminal and the hosting bank. It has extra security and nobody can use your credit card without your permission.
Which Fees May Be Charged?
There are numerous benefits of credit card fees that you may be required to pay, and it’s crucial for you to talk to your lender to avoid any kind of complication or difficulty. The common fees include:
- Annual fees – this is charged annually and you can avoid them by getting a card without the annual interest rate. However, if you are a high spender, you may get higher rewards.
- Balance transfer fee – this is usually charged when you move the balance from one card to another and you should pay a transfer fee if the interest you are paying on your current card is greater than the fee you will pay to make the transfer.
- Late payment fees – if you do not pay your balance on time, then you might accrue late payment fees and this could increase the amount which you are asked to pay later.