As you may have found, many banks that issue credit cards to people with poor credit will charge a huge amount of interest when compared to normal credit cards. Essentially, the bank charges higher rates since is risky for the bank to issue credit cards to a person with bad credit. The bank realized that is always the chance that they may lose money due default by the customer. So, as you might expect, they make up for the loss by charging high interest rates.

But, unsecured credit cards are not your only option. You do not have to pay the fees and high interest rates. You can choose to obtain a credit card guaranteed by your own cash. Many banks offer such cards, which require you to have a certain amount of money on hand at the bank, usually equal to your credit line.

When you select a guaranteed credit card it is critical that you make sure that the credit card provider (usually a bank) will be reporting your payment information to all of the major credit bureaus. This is especially important if you are working your way out of credit trouble. Please know that all credit cards guaranteed by banks have this feature.

Another thing that you will want to check on is credit increases. After all, you want to be awarded on-time payment history. So, make sure that any guaranteed credit card offers credit increases with good payment.

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Two Types of Credit Cards with Bad Credit

You can classify bad debt credit cards into 2 categories. The first category of credit cards with bad debt are 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 credit cards with bad credit 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.

Find the Credit Cards with Bad Credit Right for You

When looking for credit cards with bad credit, 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.

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