Unsecured Second Chance Credit Cards
Second chance credit cards are ideal for anyone with bad credit or who has gone through a bankruptcy. An unsecured second chance credit card work just like a real credit card. It does not require any security deposit.
These second chance credit cards (unsecured) offers credit, convenience and the chance to rebuild one's credit history. Is there a catch? In these next articles, we look at the pros and cons.
Getting approved for an unsecured credit card is possible even if you have a bad credit score or after a bankruptcy. These bad credit unsecured credit cards allow users to fully enjoy the benefits of having credit cards. While it may be easier to get approval for a secured credit card or to get a prepaid debit card, you could also qualify for an unsecured credit card. While having one of these credit cards is helpful, it should not be relied on for the long term.
While the concept of getting a reprieve from a bad credit situation through an unsecured 2nd chance credit card sounds good in general, there are both advantages and disadvantages involved with getting the card. We will look at some of the pros and cons of getting a second chance unsecured credit card for anyone with bad credit or who has been through a bankruptcy.
Unsecured Second Chance Credit Cards Work Just Like Any Other Credit Card
The main advantage of getting an unsecured credit card is that it is a real credit card. Real in the sense that once approved, you actually will be extended credit. Unlike a secured credit card, you do not have to deposit an amount equivalent to the credit limit of the card. Plus, some banks or finance companies will even guarantee instant approvals if you meet their basic criteria.
The main disadvantage of second chance credit cards that are unsecured are the amazingly high interest rates. Think 50% APR (annual percentage rate) and more. If you've ever experienced buying lots of items with a credit card and then just paying off the minimum balances each month, you may have an idea of how this could sink you into debt really fast.
Most of the big balances that you owe to the credit card company end up being interest on your purchases, not the value of the original purchases (ie. the principal amount). With a second chance unsecured credit card for bad credit, if you try to carry any type of balances, you will find it will quickly snowball in a huge monthly payment, most of which is due to the compounding monthly interest.
Besides high interest charges, there are a number of fees associated with these cards. To find out more, check out this article on second chance credit card fees.
Unsecured 2nd Credit Cards Are Useful For Improving Credit History
Unsecured second chance credit cards are great from anyone who is ready to step up and take good control of their finances. Once you are approved for an unsecured 2nd chance credit card, your credit card usage activities monitored major consumer credit rating agencies. A record of having a low balance to credit limit ratio, plus on time monthly payments will help to increase your credit rating over time.
A good credit score will help people to move forward in their financial lives. For a few people, getting there may mean saying good-bye to old habits that may have triggered the bad credit situation. Whatever it takes, there are many advantages to re-establishing one's credit history - access to new opportunities like getting approved to move into a new apartment, getting new employment (if the employer checks credit scores), buying a car or a home.
In order to qualify for an unsecured second chance credit card, a FICO score of 500 or above is often needed. If you research carefully, there may be some banks and financial institutions willing to accept clients with lower credit scores than that. Another route is to first seek approval for a secured credit card and exhibit responsible use of the card. In 6 - 12 months time, you can have the card adjusted into their unsecured credit cards program..
Whatever your situation may be, don't settle for the first unsecured second chance credit cards offers you see out there. You can often find competing offers. Take a look at a few different websites offering these cards to get a better idea about your choices and the specific requirements.
As an alternative to a conventional checking account, consider a prepaid Visa card account with no ChexSystems requirements. It works just like a checking account, allowing for direct deposit of paychecks and online billpay (one-time or recurring payments). You can deposit cash into the account from 135,000 retail locations nationwide. In addition, the card can be used anywhere Visa is accepted. Click to learn more: The Perfect Alternative to a Checking Account!