A second chance credit card is geared toward people who have for various reasons, purposely or not, made mistakes related to their credit card usage. The issuers of this type of card believe that the consumer deserves a second chance in order to prove their creditworthiness.
These cards are also called “bad credit” credit cards. The whole reason behind this concept is to provide the consumer with an opportunity to improve their credit by practicing good spending habits. They normally offer the same benefits as a “standard” card.
There are several types of second chance cards. Which one you will qualify for depends on how good, or bad, your credit is. Some people will qualify for an unsecured card, while others may qualify for a secured card or possibly even a prepaid card.
It is wise to contact a credit provider prior to applying for one of the cards. A credit provider will be able to guide you to the best financial product. It is important to know which type of card to apply for because any denied application will adversely affect your credit score further.
An unsecured second chance card is very much like a typical MasterCard or Visa. The main difference being that these cards normally carry with them a much high annual percentage rate (APR). This means that the cardholder will pay a higher rate of interest if the cardholder does not pay the bill in full each month. The reason these unsecured second chance cards carry such a high APR is that the cardholder presents a higher risk to the credit company because of the cardholder’s past spending and payment behavior.
A secured card is different from an unsecured card in that a deposit is required before the secured card may be used. The deposit which the cardholder provides to the credit company then becomes the credit limit. If the cardholder misses a payment, the credit company will make the payment from the deposit on hand. If the cardholder is in good standing when the account is closed, the deposit will be returned
Both secured and unsecured credit cards can help a consumer to rebuild their credit score by reporting to the three major credit reporting agencies. This, of course, will require the cardholder to maintain good spending practices. After a while, the consumer will be able to qualify for better APRs and lower fees and charges.
Prepaid credit cards require the cardholder to “load” their credit card with funds through direct deposit or by going to specific locations which offer this service. Prepaid users will not see an increase in their credit score by using these because the provider is not offering a line of credit.
Second chance credit cards are beneficial for people who cannot qualify for “standard” credit, but who need the benefits. When searching for a second chance credit card, be sure to study the charges, fees, and APRs of each one so you can choose the best deal.
Posts Tagged ‘ Credit Provider ’
Aug
The lowest in the hierarchy of precious metal named credit cards, silver credit cards have been around since the conception of credit cards in the mid-1950s. Today silver cards have been surpassed in prestige by gold credit cards and platinum credit cards and so have more commonly come to be known as ‘standard’ or ‘basic’ credit cards.
Advantages of silver credit cards
The advantages that silver credit cards have over other types of cards include:
* lower annual membership fees (if any)
* lower threshold salary which you need to earn if you want to apply
* the same credit limit as other credit cards if you have a good credit history or manage your card sensibly
* 0% interest for between 6 – 9 months when transferring your account balance from one credit provider to another
The simple fact is, if you are not that fussed over the ‘image’ you portray when you are out shopping with your credit card, and are more concerned with how you manage your credit card debit, then silver credit cards are certainly more favourable than any other credit cards on offer.
Disadvantages of silver credit cards
* lower cash withdrawal limits
* less rewards in rewards promotion packages, such as a lower percentage rate cash back return with cash back credit cards or lower airmiles with airmile credit cards
* less travel perks – for example, if you have a gold or platinum card you may be entitled to automatic upgrades when travelling, but as there are far more standard silver credit cardholders, it is unlikely this benefit will be afforded to you as well
* less prestige, which may mean retailers are less willing to give you the same service as they may provide to gold and platinum cardholders.