Credit Card APRs have risen over 20% during the past two years to an all-time high of nearly 15%, according to information CreditCards.com collects from 100 of the nation’s top credit card companies. While the best interest non-introductory rates are a reasonable 7 to 13%, people with bad credit can expect to get stuck with an APR of 24% or higher.
The Credit CARD Act of 2009 stopped card companies from raising interest rates without prior notice and curtailed other abusive practices. The credit card industry has responded by increasing interest rates for future charges and on new customer accounts. Beverly Harzog of Credit.com was quoted by CNNMoney as saying, “Rates are going up because card issuers know that once you get a card they can’t raise the rates, so they’re raising rates on the front end to ensure they get the revenue from that interest.”
So what are your best options if you have poor credit? First, stay away from cards that charge high fees commonly labeled Acceptance Fee, Participation Fee, or Annual Fee. In some cases a credit card with a $250.00 credit limit may already have $175.00 in fees charged against it!
Instead, take a look at secured credit cards. These cards are available to anyone, including recently discharged bankruptcy debtors. To obtain a secured credit card you must first provide a cash collateral deposit to the bank that becomes your credit line. For example, if you deposit $500 into the account, your credit line is up to $500. If you fail to make monthly payments or honor the terms of the credit agreement, the bank simply closes your account, offsets what it is owed against the deposit, and returns the remaining money to you.
In many cases a secured credit card is reported to the three largest credit reporting bureaus (Equifax, Transunion, and Experian), so the cardholder can improve a credit score significantly with payments over time. Some banks will reward its secured cardholders who pay on time with unsecured increases to the credit line. Bankrate.com maintains a list of banks that issue secured credit cards. Be sure to investigate and compare the fees and interest rates charged by these companies before opening an account.
If you are struggle with paying your bills each month, get out of the vicious cycle of debt by using the federal bankruptcy laws. The bankruptcy discharge can be your ticket to financial stability and savings for the future. Call today and discover how bankruptcy can help you.
Fears & Nachawati Bankruptcy Law Office