Getting the best credit card after bankruptcy is quite simple if you know where and what to consider.
Let’s begin by considering secured and unsecured credit cards. While applying for a credit card after bankruptcy, many people are in the dilemma whether to choose a secured credit card or unsecured credit card.
The difference between an unsecured and secured credit card is that a secured credit card uses a special savings account you open with the credit card issuer as a security. It functions as collateral for your credit limit.
E.g., you deposit $800 in a special savings account and then get a credit limit of $800. In case of default, the credit card issuer can withdraw money from your special savings account.
Unsecured credit cards don’t need a security. An applicant fills out a credit application and, depending on their credit report, income, etc. are given a certain credit limit. However they can also be rejected as per the credit card issuer’s guidelines.
Which card is the best? It is decided by your credit history. But applying for a secured credit card will improve your prospects of getting approved as against an unsecured credit card.
Exercise caution. There are differences between the secured cards. To worsen the situation, there are innumerable banks in the market selling secured credit cards.
Now how do you go finding the best credit card after bankruptcy? Set up a list of criteria that the secured card should meet so that you can consider it. While researching secured cards, there are 8 criteria that you should apply. This will let you shortlist the choices quickly. Here we cover the 3 major ones.
One major criterion is a low interest rate. Some secured credit cards have an interest rate of 23.99% while others have an interest rate of just 9.25%. This sole criterion will save you lot of money.
Application fees are other criteria. Though there are some secured credit cards without application fees, others have a fee as high as $120.
Another criterion to find the best credit card after bankruptcy is to ensure the secured card issuer reports to all 3 credit bureaus, but in a specific way.
Also, don’t apply for plenty of credit cards at a time. Doing so, can harm your credit score. Hence if you are not sure if you are eligible for an unsecured credit card it may make sense to choose a secured credit card.
This will give you an idea of the things you should take care of, while applying for a credit card after bankruptcy.