Secured or Unsecured?
When looking for a credit card after bankruptcy, you may receive piles of credit card offers from different companies, and choosing the right card can be a daunting task. The most important question that comes to mind is whether to go for a secured credit card or an unsecured credit card.
Financially, secured credit cards offer after bankruptcy provides you with a better deal than unsecured cards. This is because unsecured credit card offers after bankruptcy are often designed to place you right back into debt again, by using misleading techniques such as attractive low interest rates, high up-front fees etc. For example, a bank may offer you an unsecured credit line of $150, while you pay a $98 processing fee and a $39 annual fee. Many companies may also issue unsecured credit card offers with a credit line of several thousand dollars, but after you send in your application fee, the credit limit will come down to only a few hundred dollars.
On the other hand, a secured credit card requires a cash collateral deposit to become the credit line for the deposit account owned by the cardholder, your credit limit being either the amount of your deposit or some percentage above that amount. Secured credit card offers after bankruptcy are especially intended for people with a poor credit history or no credit history, and those who have failed to get an unsecured credit card in the past. They may charge higher fees, but in certain circumstances, they can be less expensive in total cost and security deposit.
Many secured credit offers after bankruptcy also feature incentives, and rewards for good payment which adds up to your current credit line without requiring any additional deposits.
Secured Credit Card Offer after Bankruptcy: what you need to know
1. Check the fees involved with the credit card offer after a bankruptcy, because regular payments such as annual fees or processing fees may have to be made. Also remember, annual fees differ significantly between various banks.
2. Go for a secured credit card offer that doesn’t charge an application fee.
3. You do not have to pay a high interest for a secured credit card you get after bankruptcy because the card is secured by a deposit.
4. The company that offer secured credit card after your bankruptcy should be able to report your payment history to the three credit bureaus, in order to reestablish your credit history.
5. The company should not report that you are holding a secured card to the bureaus, which can adversely affect your credit score.
6. Watch out for companies credit card offers after bankruptcy that use deceptive practices