Do you know where to get a new credit card after bankruptcy? Like it or not, these are very important financial tools since you will be severely restricted without any credit. Furthermore, using secured credit cards is the best way to rebuild credit history after bankruptcy.
Some people may have been misled about secured credit cards that do not help you rebuild your credit history. Actually, you need to get those that report your monthly payment activities to the agencies such as Experian, Equifax, TransUnion. Some do, such as the Orchard Bank Secured MasterCard but there are some that only report late payments so these do not improve your credit score at all.
It is quite simple to choose a good post bankruptcy credit card among the many offers available such as the First Premier Bank Secured Credit Card. As far as the retailers are concerned, no one will know whether you are using a secured or unsecured card. That is why the Aventium Gold Credit Card that report to credit bureaus are just as good as unsecured cards issued by banks. More importantly, if you have just been discharged from bankruptcy, it will be a lot easier getting legitimate secured Visa cards from big banks compared to any of the unsecured cards.
After you have filed for a Chapter 7 Bankruptcy, you need to start rebuilding your credit history which is not an easily accomplished task. It takes a few months but your FICO score will definitely raise back to 600+ levels eventually, as long as you do not make any more mistakes such as late payments or account charge offs or getting more $1000 loans for bad credit etc. The two main ways of increasing your rating is to correct and remove all mistakes recorded on your credit report and the second method is using a secured credit card.
You can get instant issue secured cards when you open an account with a small initial deposit. The minimum amount required depends on the card issuer requirements, but it is easy to find bad credit secured cards with $200 opening deposit or less. These funds are held in a checking account so you still earn a bit of interest when left untouched. The credit limit on these secured cards is wholly based on your bank account deposit. Some banks allow you to charge up to the full amount while others limit you to a percentage.
While this sounds like a debit card, note that secured cards are credit based and full payments must be cleared at the end of every month otherwise the bank will charge you interest for the outstanding balance. If your payment is late, this will be recorded on your credit report. The banks will only use the security deposit in your account to pay off the debt you owe as the final option. Because many people do not understand this, they end up causing additional damage to their FICO ratings by over-spending.
Note that you should wait until you have been fully discharged from bankruptcy before you can qualify for a secured card. Any offers that guarantee you an issued card while in bankruptcy is probably fraudulent and you should avoid giving them your personal details.
When you compare the best secured credit cards for bad credit, look out for the fees before you get attracted by the so called benefits and cash back incentives available. Some cards may charge more than $100 in fees without you noticing and eat away the account opening deposit you placed. A small one-time fee is acceptable but do avoid cards with monthly fees.
The interest rates for secured cards on balances should be a small concern. Frankly speaking, these are among the highest APR charged at 19% to 24% but you should not be worried because you are supposed to hold a zero balance. Every month, just spend a token amount and charge it to your card. Pay it off within the grace period and you will not incur any interest fees. Meanwhile, your payments are on time and reported to the credit bureaus.
Make sure you are clear about the terms and obligations to the card issuing company such as the maximum allowed payment grace period, penalty fees for not making full payment on time, annual card fees etc. It takes a lot of effort to repair a small credit mistake, so the best way to repair credit after bankruptcy is to avoid making more mistakes.
If your goal is rebuilding damaged credit, do not get prepaid credit cards such as the Eufora Pre-Paid MasterCard. These cards with stored cash value are designed for convenient payments especially for online purchases, but they do not report to the agencies so they cannot help you establish new credit after discharged bankruptcy.
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