When you make purchases, your credit limit decreases, monthly payments are calculated, and you are sent a bill. If you make purchases, a monthly payment is expected just like a regular credit card. Secured cards are great because they function like regular credit cards allowing you to book travel arrangements such as hotels and rental cars that do not accept prepaid cards or debit cards.
Like prepaid cards, approval is usually guaranteed regardless of your credit score. Unlike prepaid cards, many secured card issuers report payments to credit bureaus. This can be a great way to establish or re-establish your creditworthiness by showing timely payments. After several consecutive timely payments, many secured card issuers will increase your credit limit without requiring an additional deposit. The third option is an unsecured credit card. This is a regular charge card that does not require a deposit, and your credit score is taken into consideration. If you have bad credit, the limit on an unsecured card may be lower than a person with good credit, and you may be subject to slightly higher interest rates and/or fees, but the advantage is that you will not have to make any kind of deposit up front. Many unsecured credit cards for bad credit come with credit limits up to $1000. Making small purchases and timely monthly payments can help you re-establish creditworthiness as most unsecured card issuers report your payments to the credit bureaus. Click here to get credit cards for bad credit or click here to do a low interest rate credit card. Remember, making timely payments is a sure way to prove creditworthiness. And if your credit is bad, you should also consider debt negotiation, debt settlement, debt counseling, and credit repair. Getting your debts under control is key toward achieving better credit
While low interest rate credit cards are not currently very common there may well be lots of low interest credit card offers hitting your mailbox in the next three to nine months, as the banks and lending institutions eventually get bailed out of their bad loans by the Federal Government, and then start competing for the revenue streams that credit cards represent.
Here is a simple set of guidelines for you to keep in mind as these offers come pouring in; nearly every single one of the guide lines boils down to common sense and reading the fine print, and they all come down to understanding how interest works and how banks make money off it.
When you have a credit card, it has an interest rate, expressed as a percentage. This is the percentage of your annual balance that is charged as a usage fee every year by the bank. For your convenience, it's applied monthly. For example, if you have a card with a 12% APR interest rate, and borrow $1,000 on it as your average balance, you'll bay $120 in interest on the loan.
Every credit card has a grace period; this is the period during which if you pay off the balance, no interest accrues. One of the things to look at carefully in a low interest credit card offer is how long the grace period is. Typical grace periods are in the realm of 25 to 35 days; longer grace periods are better than shorter ones from your perspective. Some low interest credit card rates set their grace periods as low as 14 days after the purchase - even if they wouldn't run another billing cycle in the mean time!
The reason why grace periods are important is because the way to minimize the disaster of bad credit management is to pay off your credit card bills in full, every month, just like you make your car payment every month. Keeping a balance means you start accumulating interest, and the rule of thumb on interest is that it always makes everything more expensive. The mathematical rule of thumb on interest is called the Rule of 72. Divide 72 by your interest rate, in points, and that's the amount of time it takes for the cumulative interest payments to equal the average balance you had on the card.
Some low interest rate cards have an introductory rate, typically 2-3%. If you have an outstanding balance on another card, and have an intro rate offer, look into transferring your high interest balance to the low interest card, and working out how much you have to pay each month during the introductory period in order to pay off the entire outstanding amount. Look at it as a way to get yourself out of debt, not as a way to get more money to spend, and you'll be safer. Pay attention to what the interest rate will be when the introductory low rate ends, and look at annual fees. Also look into what the interest rate changes to if you're ever late with a payment. Most credit card companies run their rates up substantially in that set of circumstances.
As with all financial services options, look at low interest credit cards in context. Be sure to compare the various offers, make sure that what you're getting is, in fact, the best deal for your situation, and work responsibly with your credit to build up a good credit history, so you can keep a good credit history and when you want to buy a big item like a house or a car you can get the credit you want easily.