Will a Bad Credit Credit Card Save Me Money?

If you have poor credit and are seeking to improve it, you may benefit from getting a bad credit credit card. They’re easy to qualify for even if you’ve made some mistakes in the past, and with consistent, responsible usage, you can gradually boost your credit score. Despite these perks, however, this type of card isn’t going to save you money.

Why credit cards for poor credit won’t save you money

If you’re looking to save some dough, you won’t have any luck with a credit card for bad credit. Because people who qualify for these cards don’t have good credit, they are considered riskier and are given a higher interest rate. Your interest rate may be 20% or even higher, so if you ever carry a balance on your card — meaning you don’t pay your balance in full each month — you will end up spending a lot of money on interest.

Accordingly, this type of credit card can actually cost you more money than lower-interest credit cards if you ever carry a large balance. The best way to avoid this unnecessary expense is to never charge more on your credit card than you can reasonably pay off in the next month or two. If you don’t carry a balance, you won’t spend money on interest payments, but you also won’t necessarily save money. You’ll just have a brief, free loan as you would with any credit card.

What a credit card for bad credit can do for you

While this type of credit card can’t save you money, it can help you build or improve your credit if it’s lacking. Why should you care? A bad credit score can make it difficult to qualify for loans, get favorable rates on insurance or even get a lease approved for an apartment.

The best way to boost that score is to show you can use a credit card responsibly. Qualifying for a credit card for poor credit and making smart moves such as keeping your credit card balance low and paying every bill on time will help increase your credit score. Before you know it, you’ll be able to qualify for a card with a better interest rate and possibly even bells and whistles like a rewards program.

An extra perk: Unlike debit cards, credit cards offer zero liability on unauthorized purchases made if your card is lost or stolen. This extra level of protection you get with credit cards is especially valuable with an increasing number of data breaches.

---

Bad credit illustration via Shutterstock.

The post Will a Bad Credit Credit Card Save Me Money? appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

4 Benefits of Getting a Bad Credit Credit Card

It can be easy to get in trouble with credit cards, but they can be helpful financial tools when used appropriately. Credit cards for bad credit are especially beneficial if you’re trying to improve your credit score. Here are four ways a credit card can help your finances.

Build good credit

If you have poor credit, either because of limited credit history or some mistakes from the past, responsible use of a bad credit credit card is your ticket to improved credit. When you use a credit card, your usage is reported to the major credit bureaus. Responsible behaviors such as making your minimum payments, paying your bills on time and keeping a low balance will gradually raise your credit score.

Enjoy the benefits of improved credit

There’s a reason behind doing all this hard work: Using your credit card for bad credit wisely and building a better credit score will pay off in many ways. When you fill out a lease to rent an apartment or home, your credit is checked to make sure you have a strong repayment history. Your credit is also checked any time you apply for a loan, such as an auto loan or mortgage.

Good credit not only improves your chances of being approved, but also means you will get a better rate. It can also mean lower rates on insurance and future credit cards. Additionally, many employers run credit checks on job candidates, so having a solid credit report might even influence whether you are offered a job.

More-secure transactions

All credit cards feature the benefit of zero liability for the cardholder on unauthorized purchases. This means if your credit card is lost or stolen, you are not responsible for any of the fraudulent purchases. Debit cards do not have the same legal protections and may result in loss of money if stolen. This credit card benefit is especially valuable as credit card data breaches become more common.

Helpful for emergencies

Credit cards for people with bad credit should never be looked at as free money or a way to live beyond your means. It’s important to keep in mind that each time you swipe, you are borrowing money and must pay interest if you carry a balance. However, credit cards are very useful for occasional emergencies.

Say you get a flat tire and it’s the very end of the month, and you need a new tire but don’t have a spare $80. You can put it on your credit card and pay it off as soon as you get your paycheck. A credit card serves as a handy way to front-load expenses that you know you can pay off in the very near future. Just don’t get in the habit of doing this regularly, as you could get stuck in debt.

---

Group of hikers in the mountains image via Shutterstock.

The post 4 Benefits of Getting a Bad Credit Credit Card appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

Will a Bad Credit Credit Card Save Me Money?

If you have poor credit and are seeking to improve it, you may benefit from getting a bad credit credit card. They’re easy to qualify for even if you’ve made some mistakes in the past, and with consistent, responsible usage, you can gradually boost your credit score. Despite these perks, however, this type of card isn’t going to save you money.

Why credit cards for poor credit won’t save you money

If you’re looking to save some dough, you won’t have any luck with a credit card for bad credit. Because people who qualify for these cards don’t have good credit, they are considered riskier and are given a higher interest rate. Your interest rate may be 20% or even higher, so if you ever carry a balance on your card — meaning you don’t pay your balance in full each month — you will end up spending a lot of money on interest.

Accordingly, this type of credit card can actually cost you more money than lower-interest credit cards if you ever carry a large balance. The best way to avoid this unnecessary expense is to never charge more on your credit card than you can reasonably pay off in the next month or two. If you don’t carry a balance, you won’t spend money on interest payments, but you also won’t necessarily save money. You’ll just have a brief, free loan as you would with any credit card.

What a credit card for bad credit can do for you

While this type of credit card can’t save you money, it can help you build or improve your credit if it’s lacking. Why should you care? A bad credit score can make it difficult to qualify for loans, get favorable rates on insurance or even get a lease approved for an apartment.

The best way to boost that score is to show you can use a credit card responsibly. Qualifying for a credit card for poor credit and making smart moves such as keeping your credit card balance low and paying every bill on time will help increase your credit score. Before you know it, you’ll be able to qualify for a card with a better interest rate and possibly even bells and whistles like a rewards program.

An extra perk: Unlike debit cards, credit cards offer zero liability on unauthorized purchases made if your card is lost or stolen. This extra level of protection you get with credit cards is especially valuable with an increasing number of data breaches.

---

Bad credit illustration via Shutterstock.

The post Will a Bad Credit Credit Card Save Me Money? appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1uyErTV

Read More

4 Benefits of Getting a Bad Credit Credit Card

It can be easy to get in trouble with credit cards, but they can be helpful financial tools when used appropriately. Credit cards for bad credit are especially beneficial if you’re trying to improve your credit score. Here are four ways a credit card can help your finances.

Build good credit

If you have poor credit, either because of limited credit history or some mistakes from the past, responsible use of a bad credit credit card is your ticket to improved credit. When you use a credit card, your usage is reported to the major credit bureaus. Responsible behaviors such as making your minimum payments, paying your bills on time and keeping a low balance will gradually raise your credit score.

Enjoy the benefits of improved credit

There’s a reason behind doing all this hard work: Using your credit card for bad credit wisely and building a better credit score will pay off in many ways. When you fill out a lease to rent an apartment or home, your credit is checked to make sure you have a strong repayment history. Your credit is also checked any time you apply for a loan, such as an auto loan or mortgage.

Good credit not only improves your chances of being approved, but also means you will get a better rate. It can also mean lower rates on insurance and future credit cards. Additionally, many employers run credit checks on job candidates, so having a solid credit report might even influence whether you are offered a job.

More-secure transactions

All credit cards feature the benefit of zero liability for the cardholder on unauthorized purchases. This means if your credit card is lost or stolen, you are not responsible for any of the fraudulent purchases. Debit cards do not have the same legal protections and may result in loss of money if stolen. This credit card benefit is especially valuable as credit card data breaches become more common.

Helpful for emergencies

Credit cards for people with bad credit should never be looked at as free money or a way to live beyond your means. It’s important to keep in mind that each time you swipe, you are borrowing money and must pay interest if you carry a balance. However, credit cards are very useful for occasional emergencies.

Say you get a flat tire and it’s the very end of the month, and you need a new tire but don’t have a spare $80. You can put it on your credit card and pay it off as soon as you get your paycheck. A credit card serves as a handy way to front-load expenses that you know you can pay off in the very near future. Just don’t get in the habit of doing this regularly, as you could get stuck in debt.

---

Group of hikers in the mountains image via Shutterstock.

The post 4 Benefits of Getting a Bad Credit Credit Card appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1qGv6NH

Read More

Credit Score vs. Credit Report: What’s the Difference?

When you apply for a credit card, apartment rental, mortgage or car loan, two metrics help prove your ability to pay off debt: your credit score and credit report. Although they measure similar things, understanding the differences can be confusing, especially if it’s your first time applying for a credit card.

It boils down to this: Your credit score, a simple number, is determined by the detailed information in your credit report. But let’s break it down further:

Credit Score

Your credit score is a single number lenders use to evaluate your credit worthiness. There are many different types of credit scores out there, but the most common is a FICO score, determined by the Fair Isaac Corporation using five factors:

• Payment history (35%): How often you miss payments and how late those payments are.


• Amounts owed (30%): The balance on all your credit accounts compared with your credit limit.


• Length of credit history (15%): The amount of time you’ve had credit accounts open. (This makes it difficult for people with little or no credit to have a high score.)


• New credit (10%): The number of new credit cards you’ve applied for recently. In general, a lot of new credit at once hurts your overall score, especially if you have a short credit history.


• Types of credit used (10%): The diversity of credit you have, between credit cards, loans and other accounts.

For better or worse, your score can fluctuate over time depending on your account activity. FICO scores range from 300 to 850. Scores above 720 are considered “excellent,” and scores above 690 are deemed “good.” If you have little or no credit history, you’ll have a lower score.

When you apply for a credit card or loan, the issuing bank will access your credit score to determine your eligibility. To check your own FICO score, purchase it on myfico.com.

Credit Report

Your credit report is an exhaustive list of your lines of credit and payment history, but it doesn’t contain your credit score. Three major agencies — Equifax, Experian and TransUnion — compile credit reports. Several pages long, they detail all the accounts you’ve ever opened or closed, loans you’ve taken out, and how diligently you paid off outstanding balances. Finally, if you’ve ever been sued or filed for bankruptcy, that will appear on your credit report too.

Like with a credit score, if you don’t have credit, your report will be sparse at best. It’s important to establish credit because lenders, landlords, insurers and employers use credit reports to holistically evaluate your borrowing history and determine applicants’ eligibility for loans, credit cards, rentals, insurance policies and jobs.

Everyone’s legally entitled to one free credit report per year from each of the three major agencies. You can order these reports from http://1.usa.gov/1nbIDEH. They sometimes contain errors, so it’s important to examine them carefully and dispute any mistakes you find with the credit bureau that issued the report.

Good credit scores and credit reports are key to accessing financial products. If you spend responsibly, pay off balances and are careful about opening new accounts, you’ll be well on your way to having healthy credit and the documentation to back it up.

---

Woman with credit report image via Shutterstock.

The post Credit Score vs. Credit Report: What’s the Difference? appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1qGv6Nu

Read More

Credit Score vs. Credit Report: What’s the Difference?

When you apply for a credit card, apartment rental, mortgage or car loan, two metrics help prove your ability to pay off debt: your credit score and credit report. Although they measure similar things, understanding the differences can be confusing, especially if it’s your first time applying for a credit card.

It boils down to this: Your credit score, a simple number, is determined by the detailed information in your credit report. But let’s break it down further:

Credit Score

Your credit score is a single number lenders use to evaluate your credit worthiness. There are many different types of credit scores out there, but the most common is a FICO score, determined by the Fair Isaac Corporation using five factors:

• Payment history (35%): How often you miss payments and how late those payments are.


• Amounts owed (30%): The balance on all your credit accounts compared with your credit limit.


• Length of credit history (15%): The amount of time you’ve had credit accounts open. (This makes it difficult for people with little or no credit to have a high score.)


• New credit (10%): The number of new credit cards you’ve applied for recently. In general, a lot of new credit at once hurts your overall score, especially if you have a short credit history.


• Types of credit used (10%): The diversity of credit you have, between credit cards, loans and other accounts.

For better or worse, your score can fluctuate over time depending on your account activity. FICO scores range from 300 to 850. Scores above 720 are considered “excellent,” and scores above 690 are deemed “good.” If you have little or no credit history, you’ll have a lower score.

When you apply for a credit card or loan, the issuing bank will access your credit score to determine your eligibility. To check your own FICO score, purchase it on myfico.com.

Credit Report

Your credit report is an exhaustive list of your lines of credit and payment history, but it doesn’t contain your credit score. Three major agencies — Equifax, Experian and TransUnion — compile credit reports. Several pages long, they detail all the accounts you’ve ever opened or closed, loans you’ve taken out, and how diligently you paid off outstanding balances. Finally, if you’ve ever been sued or filed for bankruptcy, that will appear on your credit report too.

Like with a credit score, if you don’t have credit, your report will be sparse at best. It’s important to establish credit because lenders, landlords, insurers and employers use credit reports to holistically evaluate your borrowing history and determine applicants’ eligibility for loans, credit cards, rentals, insurance policies and jobs.

Everyone’s legally entitled to one free credit report per year from each of the three major agencies. You can order these reports from http://ift.tt/o2j1vQ. They sometimes contain errors, so it’s important to examine them carefully and dispute any mistakes you find with the credit bureau that issued the report.

Good credit scores and credit reports are key to accessing financial products. If you spend responsibly, pay off balances and are careful about opening new accounts, you’ll be well on your way to having healthy credit and the documentation to back it up.

---

Woman with credit report image via Shutterstock.

The post Credit Score vs. Credit Report: What’s the Difference? appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

Bad Credit Credit Card Balance: 3 Reasons to Pay It Off Now

If you rack up more purchases with your bad credit credit card than you can pay off by the end of the month, you’ll find yourself carrying a balance. Or you may have heard misguided financial advice that carrying a balance is good for your credit score, so you deliberately don’t pay your balance in full.

We’re sorry to be the bearers of bad news, but carrying a balance on credit cards for people with bad credit just isn’t a smart idea. Here are three reasons why you should aim to pay your balance in full instead of carrying a balance.

1. You’ll pay high interest rates

Credit cards for poor credit have some of the highest interest rates out there, often over 20%. When you carry a balance instead of paying it off in full each month, you have to pay interest on that borrowed money. Not only is this high interest fee a waste of money, but you can’t make as much progress on debt because a large portion of your payments go toward interest instead of the actual amount you owe. This alone is enough to get some people stuck in a cycle of debt for longer than anticipated.

2. It won’t improve your credit

You may have been told that carrying a balance improves your credit score, but this is a bad myth that just won’t die. Carrying a balance on a bad credit credit card, or on any credit card for that matter, won’t do anything for your credit. Instead, try other proven tactics for improving your credit score, such as carrying a low balance and paying your bills on time. These strategies also don’t require you to spend any money on interest payments.

3. It can actually hurt your credit score

Many factors go into determining your credit score, but one of the big ones is your credit utilization ratio. A massive 30% of your credit score is determined by how much of your available credit you are using at any given time. Using credit isn’t necessarily bad, but carrying a large balance can hurt you. According to myFICO, “When a high percentage of a person’s available credit is been used, this can indicate that a person is overextended, and is more likely to make late or missed payments.” Aim to use no more than 30% of your credit limit on each of your credit cards for optimal credit health.

---

Online shopping image via Shutterstock.

The post Bad Credit Credit Card Balance: 3 Reasons to Pay It Off Now appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1IKsbJI

Read More