Written by Jared Vincenti
If you have bad credit, it can seem impossible to get a credit card. Most companies will try to convince you that your only option is to take a card with a high interest rate, and rebuild your credit with that. However, if you are already paying off credit card debt, you’re not going to want to use a card with a painfully high APR.
Mending Your Credit
While you can make up for bad credit by taking a credit card with a high interest rate, it’s not likely to make things better. Since your credit score is not just based on having the card, but by using it, you need to use your high-interest card for it to do any good. And if by using it, you’re just intensifying your debt, you haven’t solved any of your problems.
For people in this situation, it seems like a lose-lose situation. However, you can get out of this trap. By taking a secured credit card, you can easily start rebuilding credit. A secured card takes a lump sum when it is issued; this money is then kept as collateral on the card. So long as the card stays current, the money is not touched.
But wait! Coming up with a lump sum to get a credit card is pretty hard if you’re already in debt, no? There’s no denying that. But saving up for a deposit on a secured card can end up costing less than paying APR fees in excess of 25 per cent on a balance on another card. And in addition, it rebuilds your credit quickly–and once you’ve got a good credit card, you can close your secured card and get your deposit back.