‘Bad debt credit card’- what’s that?
Bad debt credit card is basically a credit card that the credit card
suppliers offer to the people who have bad debt. Did that astonish you? Well, don’t let your thoughts run just
You can classify bad debt credit cards into 2 categories based on what you understand by bad debt credit card.
The first category of bad debt credit cards is those credit cards that are secured (and are also known as secured
credit cards). These bad debt credit cards require a security i.e. you have to open (and maintain) a bank account
with the bad debt credit card supplier. The credit limit on your bad debt credit card is calculated as a percentage
of the balance you hold in the bank account you have opened with bad debt credit card supplier. Generally, this is
50-100% of your bank account balance. So, this bad debt credit card enables you to spend the amount you hold in
your bank account; only the way you spend it changes (i.e. instead of spending that as cash you spend it using your
bad debt credit card). So bad debt credit card lets you enjoy the convenience and other benefits that are
associated with credit cards, even with a bad debt. This security is as such important for the bad debt credit card
supplier; after all how can you trust someone who has a bad credit rating.
The other category of bad debt credit cards are nothing unusual, they are the same cards that we know of most
commonly; the only difference is in the way you get them and the objective behind getting them. Here, we are
talking about the credit cards that you use as a debt consolidation mechanism i.e. consolidating bad debt (as such
any debt is bad). So we can call them bad debt credit cards too. These operate by transferring of the balance you
owe on your current, high interest credit cards to these bad debt credit cards that have a lower APR (at least for
some initial period). Hence, these bad debt credit cards help you in consolidating your debt and getting some
relief from the higher APR that you were experiencing on your current card.
Some people accept both of the above categories of credit cards as bad debt credit cards while
others tend to go with one or the other. So, what you regard as a bad debt credit card is really a matter of personal choice.
Credit in Minutes Tip #1
Stay on top of your credit report. Most credit reports contain errors. Make sure you check your credit report
every year (you get one free credit report every twelve months) and if there are errors make sure to challenge them
with the reporting credit agency. Credit agencies are required to investigate each and every challenge that gets
Credit in Minutes Tip
Just because you qualify for all of those credit cards does not mean you should get them. A person with too many
credit cards looks sketchy in the eyes of a potential creditor. Think of it this way: if a person is financially
stable does he or she need ten different credit cards? Wouldn’t just one or two suffice?
Credit in Minutes Tip
The best way to raise your credit score is to make all of your payments on time. It sounds too simple to be
true, but that’s all there really is to it. Staying out of debt and/or making all of your debt payments on time
will keep your score up where it should be.