The best credit card for people with bad credit history
People with bad credit history deserve a credit card that would help them improve their financial "rating". Since there is no such Time MONEY decided to invent it.
Making a rating of the best, in the opinion of the publication, credit cards, it turned out that the Discover It Secured card is the most suitable option for borrowers with a bad history. There are no annual fees for it, no penalties for skipping the first payment; Three credit bureaus report on the cardholder’s activities, and Discover also reviews the client’s account after a year of use and determines whether he can receive an unsecured card. And even bonuses.
But Discover It Secured is actually one of a kind. The lack of choice of banking products for subprime borrowers - and this is 50 of millions of people with a credit rating lower than 600, according to NerdWallet - is very sad. It is difficult for these people to get a loan for any need - from a car to a mortgage, and if they are still credited, the interest rate is higher for them. A Maryland 30-year-old resident with a bad credit history will pay 150 000 dollars more debt than if she had a good credit history, according to Credit.com.
Perfect Bank Card
An ideal card would have a consumer-friendly policy based on the best existing cards, and conditions that would help holders to spend more correctly and not fall into financial turmoil. And as a result, it would improve the credit history of the holders so that more profitable banking products would be available to them again.
According to the opinion of MONEY, such a card should have the following conditions:
- Lack of annual service charges. Most of the credit cards in the MONEY rating are not charged a service charge from customers. On this map should be the same.
- It must be a secured card. With a secured card, your credit limit is equal to the amount of cash that you have pledged as a guarantee - therefore, your ability to enter debt is limited. There is a psychological advantage in this: since the money you earn is at stake, you will have less temptation to risk them without paying your bills.
- It should help improve credit history. Information about your credit activity should fall into three credit rating agencies. This feature is in Discover It Secured, but not in other secured cards. As with Discover It Secured, there should be an opportunity to switch to an unsecured card after a year of trouble-free use.
- Her credit limit should be modest - about 1500 dollars. The amount should be such that with daily use your credit utilization rate remains low and you are not tempted to spend a lot. In this case, the limit should be enough for unforeseen expenses.
- The card itself should keep track of your spending. Credit expert John Ulzheimer assumes that the card can help the holder to regulate the credit utilization rate with the help of such reminders:
- Text notifications: After each card purchase, you will receive a text notification on the phone about how much of the available credit limit you used as a percentage. For example, a card paid 10 dollar burbit is 2% of your 500 dollar limit.
- Automatic blocking: If you want the restrictions to be tougher, you can put a limit on the use of the limit over 30%. The card will be automatically blocked until full payment of the debt on it.
- There should be a promotion for those who repay the loan weekly. Credit expert from NerdWallet, Sean McQway, suggests creating a “quick payout” option that will encourage you to make full weekly debt payments. Thus, this card will be more like a debit card, and you will not expect "surprises" at the end of the month.
- The card must be a reasonable percentage for the use of money. MONEY authors believe that the percentage for servicing a “dream card” should not exceed the national average for unsecured cards - now it is about 18,2%, 7 percentage points lower than the average annual interest rate for secured cards.
- The card should not be penalties for late payment. This is already on the existing bank card, one of the best MONEY - Citi Simplicity.
- At first, the card should work only on basic purchases. Let's say, for the first three months of using the card, you can only pay for purchases of food, gasoline and utilities with it. “In this way, the holder will not lose control over his debt and will learn to use the card only for convenience reasons,” says Ulzheimer.
- The card should provide access to your credit ratings over the past year. A personal account will be created online where you can see your credit rating from each of the three US credit bureaus over the past year, as well as points that make your rating deteriorate.
- You should see your “credit history”. This card feature will allow you to see what your card looks like in all three credit reports. This will help you easily identify your mistakes. In addition, there should be a reporting form on which you can send complaints directly to credit reporting companies.
Of course, such a bank card does not exist yet. But this is only for now. We hope that soon one of the banks, caring for the financial well-being of millions of Americans, will create one for them.
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