Poor Credit Cards

There are many reasons why people get turned away when they apply for a credit card or a loan, it can be as simple as not being on the electoral roll, but often it is your financial past that creates the biggest obstacle of them all.

Poor credit, if that turns out to be the case, should not end your prospects of getting a credit card because aside from high street banks who rarely lend to people with poor credit, there are other lenders who are happy to assist those in bad situations.

Poor credit credit cards are cards that cater to those unable to get a normal bank card because of their credit history or people that don't earn enough money as required by some lenders.

When applying for a poor credit card, you might be uncertain as to how the type of card will affect your day to day usage, therefore, below are the major similarities and differences between poor credit cards and normal cards:

Similarities

1. Usage
There's virtually no difference between poor and normal credit cards in terms of usage; UK poor credit cards carry either the MasterCard or Visa sign, they are accepted in all the places a normal credit card would be.

2. Effect on credit score
Most financial activities (such as taking out a loan) are reported to credit bureaus; these are the organisations that assign credit ratings to individuals.
As you can imagine, your credit score will change depending on what you do; every time you reduce your debt, your score changes for the better, if you miss a payment or several, your score will likely go down.
A poor credit card can affect your credit score either way, depending on how you manage it. With this in mind, why not use it as a tool for improving your credit score.

Main differences

When applying for a poor credit credit card, you may notice that a few things are different compared to conventional credit cards, below are some of those differences:

1. Interest rate
The interest rate is the biggest difference between the two types of card; rates on bad credit cards can be as high as double that of normal cards.
A reassurance is that you only pay interest on outstanding balance; you can lower or avoid interest charges by paying off your balance every month.

2. Usage benefits
Normally credit card users can enjoy such benefits as Air miles, cash back, etc. No such benefits are offered on bad credit cards, although you might get such benefits as protection against fraud and an interest free (grace) period.