Month: October 2017

Loans and Credit Card Offers for Bad Credit: Find Visa Cards and Bank Loans for People With Low Credit Rating

One thing consumers may not realize is that banks are in business to make money and they rarely lose. When a client approaches a bank to borrow money, whether it’s by opening a credit card account or applying for a loan with bad credit, the bank takes precautions to be sure that their investment is profitable.

Low Credit Rating Credit Card Offers

When a bank creates an account for clients with a low credit rating, their first protective measure, an application fee, generally costs the client around $40 per card. Additionally, the application itself often includes the client’s checking account information, in case they need to take legal action. If they get a judgment against the client in court, they can simply pull the money from the client’s checking account, without further notice.

The bank that hosts the checking account is legally bound to turn over all funds to the credit card company. Some banks charge a steep fee for this “service,” $75 is not an uncommon “legal document processing” fee.

Getting Loans and Credit Cards with Bad Credit

The major difference between bad credit loans and loans for clients with good credit, is the fact that the bank isn’t sure if the client will actually make all of their payments. Because of this, they charge a higher interest rate. There are two different kinds of interest. Simple interest is just a percentage of the entire debt.

Compound Interest means that in the beginning, a high percentage of your payment is interest. For each payment, the client paying interest on the entire amount due. Depending upon the length of the loan, compound interest can cost several times the amount of the debt.

Find Credit Card Fees Before You Apply

By law, the application form will have the entire contract. Look specifically for fees related to late payments, closing the account, transferring the balance, reporting positively to credit agencies, early pay-off and going over the limit. Some credit cards, called “secured credit cards,” are attractive to people with low credit ratings because they appear to work like a bank’s debit card. However, the fees can be exorbitant, especially when a client realizes “Hey, this is my own money.”

Secured Credit Card for Bad Credit

The Visa Rush card is secured, meaning that client send them the money and then can spend it. The card can be swiped at any online or offline merchant that takes Visa. However, there’s a fee for each transaction as well as a percentage charged for using the card at a cash machine. The major selling point for the Visa Rush is that it reports to the credit bureaus regularly, allowing clients to rebuild their credit. Regular usage, though isn’t a very good idea.

Bank Loans with Bad Credit

Banks also make loans to people with bad credit. The hitch is that clients typically have to apply for a secured loan, like a second mortgage. Finding home equity loans with bad credit isn’t impossible. A good starting point is for potential clients to inquire at the bank that hosts their checking account.

Using a home equity loan to pay down credit cards (before cutting them up) can save money in the long run. In markets where the value of homes has depleted, very few homeowners will be able to get a second mortgage. Other ways to secure a bank loan are with a motor home, business, or investment account.

Clients with bad credit can still get credit cards and bank loans. Certainly no one wishes to have bad credit and a new credit account should be looked at as a chance to rebuild credit. It’s wise to be sure that the card isn’t used regularly, as the fees are probably better spent elsewhere. It’s worth the time it takes to study the contract and understand the fees associated with the account. Clients are also advised to attempt to build up equity in their home loan faster, so that they can access the funds if necessary, or even pay off the house early to save a lot of interest.

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