Unsecured Credit Cards For Blemished Credit By FederatedCreditCards.Com Copyright © 2008

Getting a credit card can be a real challenge for those with blemished credit. Generally speaking banks and credit card companies view folks with a low credit score as being high risk for defaulting on payments. Still, some banks do make unsecured credit cards available to this group. The unsecured credit cards that are normally offered to people with blemished credit have both benefits and drawbacks.

The drawback of these credit cards are they usually come with a low credit limit, no more than $500, and a fairly high rate of interest. Usually no rewards are offered.

Despite the drawbacks, unsecured credit cards bring some great benefits. Perhaps most importantly they allow you to rebuild your credit a little faster by making payments on time. They provide a level of financial security knowing you have access to money in an emergency, and all the convenience of on line shopping, telephone shopping. Normally after making your payments on time for a while a lender will increase the credit limit of your card.

Even with blemished credit some banks are competing for your business so it pays to carefully consider the terms of credit cards they are offering. Here are some things to consider when comparing unsecured credit cards:

Fees
One side effect of having bad credit is the perception of higher risk of defaulting on payments. As a result credit card issuers tend to charge higher fees for credit cards offered to people with bad or blemished credit. These fees help offset the additional administrative costs of dealing with late payments. It's not uncommon to see fees of:

Annual Fees: $25 - $95
Program Fees: $70 - $90
Account Set-Up Fees: $25 - $35

Do be aware that fees will be added directly to your credit card account which will reduce your available credit from the card until they are paid down. The total cost of maintaining the card per year is one of the main factors you should consider before making a firm decision. This will help you understand whether or not this is a credit card that will support your needs.

Interest Rate
Unsecured credit cards for blemished credit tend to start with an interest rate that is very much comparable to ordinary credit credits cards. It's important to understand the triggers that will cause a credit card's interest rate to increase. In some instances being late with the payment only one day can cause the card's interest rate to jump to over 25%.

Credit Reporting
It's important to ask whether or not the unsecured credit card issuer regularly reports your account status back to the three major credit bureaus. Most unsecured credit card issuers do. This reporting will help you rebuild your credit faster if you make payments on time. It is worth noting that some smaller lending companies do not report regularly, which won't do anything to help your credit situation, regardless of their claims. Obviously, if you can't make your payments on time then reporting to three major credit bureaus would not be helpful to you.

Credit Limit Increase
How long before your credit card account will be reviewed for a credit increase? This may become important to you since credit cards for blemished or bad credit start with low credit limits. The faster your limit can be raised the better for you. Larger credit card issuers may take longer to review your account than smaller issuers simply because of volume of customers. Do ask if a card has fees attached to limit increases.

Automatic Payment Plans
Automatic payment plans are a method in which some credit card issuers protect themselves against late payments. Do understand if the credit card you are applying for requires you enroll in an automatic payment plan. These plans require you have a checking account and they automatically take the payment from your checking on a designated day of the month. With Automatic payment plans its really important to insure your checking account has sufficient funds to make the payments each month to avoid over bank draft fees and credit card late fees.