Understanding Bad Credit Credit Cards

With the recent credit crunch many consumers in the UK and across the world are having issues with their credit card companies. There are many new policies and they are becoming more difficult to understand. With bad credit credit cards a consumer may be more susceptible to the newer policies and have a harder time staying out of the default zone. First for bad credit credit cards the consumer has a higher interest rate to begin with. Those who obtain bad credit credit cards are seen as a higher risk, which enables the issuers to enforce more bad practices. However you should not allow your bad credit credit cards to get you further into debt. There are many things you can do to make the credit card work for you rather than against you.

For bad credit credit cards to work for you keep a few things in mind. There is something called the universal default. This universal default means that if your credit rating goes down the company can raise your interest rate. For bad credit credit cards this can mean an interest rate of 34 percent. To keep the bad credit credit cards from raising the rate you simply need to monitor your credit report. Make sure that all payments you have for the month are on time. Also make sure that you do not apply for any new loans or bad credit credit cards. Applying for new loans or more credit will actually lower your credit score adversely and affect your current credit card interest rates.

You should also realise with bad credit credit cards that as long as you keep a very low balance on the card and pay that balance off every month you will not be charged interest. The bank can only charge interest if you have a recurring balance. If the balance is zero they have nothing in which to charge you interest for. To regain your good credit standing using bad credit credit cards you can enact this process as well. You can also make sure to use the card only once during the month. First of all with bad credit credit cards if you do not use the card you can have points deducted from your credit score or if you cancel the card. So it is best to use the card for 3 pounds worth of gas and then go home to pay the card in the next three to four days. This way the bad credit credit cards can’t charge you interest or deduct points for not using the card.

Bad credit credit cards were introduced to help consumers re-establish their credit history; however many of the consumers in the past have been unwise and created more debt with their bad credit credit cards. It pays to understand how to make the bad credit credit cards work for you rather than work for the credit issuers. It is a pretty simple method if you don’t use it to supplement your income, but rather increase your credit score to the good or excellent level.

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