Sunday, July 29, 2012

Unsecured Credit Cards After Bankruptcy: Options To Consider

A bad credit rating is something that tends to cause trouble when applying for a credit card, with the likelihood of getting approval or good terms reduced significantly. Logically then, getting approval when bankruptcy should be impossible - but this is not so. In fact, unsecured credit cards after bankruptcy are commonly available.

However, there are real compromises to make before getting approval with bad credit can become a reality. These compromises generally involve accepting high rates of interest charged on purchases and cash advances, and usually low credit rating.

The promise of regaining some credit ratings, and increasing a credit score, can make these terms acceptable, but there is no need to be taken advantage of. Even when bankruptcy is the chief motivation for issuers adding charges, unsecured credit cards should come with fair terms at the very least.

Why Bankruptcy is Overlooked

Technically, bankruptcy is not overlooked as there are limitations applied to protect the credit card issuer from making too large a loss. However, getting unsecured credit cards after bankruptcy is possible because of a number of reasons.

For a start, getting approval with bad credit is usually the break that those of us with low credit scores are looking for. It effectively allows us back onto the horse, and so issuers can feel confident that the mistakes of the past will not be repeated.

Bankruptcy can be a debilitating status, and it can take as long as 2 years to recover. Getting unsecured credit cards with the best terms is next to impossible until the financial status is improved. But even with poor terms, a new card is one way to rebuild.

Secured Credit Cards

One of the options available when approval on general credit cards is difficult to get, is a secured credit card. Because unsecured credit cards after bankruptcy can feature some extremely harsh charges and restrictions, it may not make financial sense to some people to get one. But placing a deposit on a card, or a secured card, provides a chance to get back to using a card at least.

There are restrictions, of course, but in only having the ability to spend what is equal to the deposit, the risk of falling to debt is removed. And because only a small amount of interest is charged on transactions, it also provides a very affordable route towards credit recovery. Getting approval with bad credit might be tricky, but getting approval on a debit card leading to stronger credit ratings, is much easier.

However, there is always the issue with finding the ready cash to place as a deposit for the card. The reality is that unsecured credit cards are the only likely option, making the search for best terms essential.

Online Card Issuers

The best place to search for unsecured credit cards after bankruptcy is the on the Internet. It is already established just how good the terms can be online, and it is no different for credit cards. The range of options is more easily accessed, and it is also easier to compare the options to better identify the right one.

Of course, the right terms can only be provided by the credit card lenders issuers that specialize in finances designed for people with poor credit. Usually, this is the best way of getting approval with bad credit.

Interest rates charged on unsecured credit cards do not have to be huge (20%) and can be secured at 10% if a low credit limit is accepted. This is a compromise, but a cautious one that is less likely to end up with a worsened financial situation.

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