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A sort of credit card known as a credit card for persons with fair credit is one that is made available to individuals who have credit scores that are considered to be in the fair range. These kinds of credit cards might be of great assistance to you in establishing or repairing your credit history.
Scores between 300 and 579 on the FICO scale indicate a bad credit rating. This rating is based on the FICO score. In most cases, applicants with FICO Scores falling within this range will be forced to pay an extra charge, and in some cases even a deposit. This score range is also the lowest on the rating scale, and applicants may have difficulty receiving approval from credit card issuers if they have a score in this range.
For consumers with bad credit, there are two types of credit card alternatives available: secured and unsecured. In order to obtain approval for a secured credit card, applicants must first place a specified sum of money into a savings account. The credit limit of a secured credit card is sometimes calculated as a percentage of the total amount placed. The cash from this deposit for a secured credit card serves only as security for any purchases made with the card; they are not used for making regular payments. A prepaid card, on the other hand, uses the money you put on it and does not record its use to credit bureaus. The majority of credit cards are unsecured credit cards. A credit card that is not secured by a deposit is essentially a revolving line of credit that has a maximum amount against which you are permitted to borrow money.
Secured credit cards: Credit cards with a security deposit can be a useful tool for helping to develop credit, but the usefulness is dependent on the issuer providing credit history information to the credit bureaus. In most cases, the issuer will require a minimum security deposit, and some of them will even put that deposit into an account that earns interest, like a CD. It’s possible that suppliers of secured credit cards won’t require a credit history or a minimum credit score in order to approve applicants.
Fees: Some card issuers may or may not collect annual fees for both secured and unsecured credit cards, and some card issuers may even charge monthly service fees in addition to an annual cost for their cards. You will have a better understanding of your total costs if you pay attention to the variety of fees associated. Additional items to keep an eye out for are any fees associated with the program or its maintenance, application fees, transaction fees, and penalty fees. There may also be fees associated with the use of optional services, such as replacement costs for lost cards or increased credit limits.
Rates: Interest rates are subject to a wide range of fluctuations and can either be fixed or variable. If you pay off the total balance at the end of each billing cycle, you can reduce or eliminate interest charges and make the most of any rewards programs, if any are available. There are certain issuers who do not apply any penalties for missed payments, while there are others that can dramatically increase your interest rates.