There are many different credit cards in the market targeted for those with excellent credit history. However, some lenders offer credit cards even for those with bad credit history and a low credit score, below 600 or 500. Since the individuals who receive those cards are not as creditworthy, the risk factor goes up, as a result of which the terms of the cards too are not very favorable. Here are some of the bad credit history credit cards that card holders should be careful of to avoiding getting into a deeper hole.
The APR or annual percent rate on the bad credit history credit cards could be too high for your comfort. Interest rates over 20% are very dangerous and card holders should be careful not to end up with outstanding balance after the due date. There are chances of the debt doubling in no time, making it even more difficult to pay it back. Although, bad credit history credit cards allow card holders to rebuild their credit history, careful management of finances is required. Otherwise the spiraling interest could add to the debt and worsen your credit score further.
There are some bad credit history, credit cards which offer rewards like loyalty points and discounts. However, card holders have to keep it in mind that these rewards do not bring great financial benefits and hence have to steer clear of them. Also the processing fee for such cards could be higher. A high annual fee, for example, could add to the debts. Similarly, the card holder should make it a point not to misuse additional benefits like cash advance or currency exchange, both of which could incur a high fee each time.
Bad credit history credit cards could lead to excessive penalties which could add to the debt. Low credit limits, which are reached very quickly due to the high card activation and application fee, could incur over the limit fees. Similarly, the late fees could also add to the debt, especially if the card holder is not able to pay off the outstanding balance before the due date. These additional penalties and charges are higher for bad credit history, credit cards and tend to be more severe for individuals with lower credit scores. One has to be cognizant of the risks at all times with such cards.