A poor credit visa is exactly as the name suggests, a visa card that is designed for people who have a poor rating. People can end up with a poor rating for a number of reasons, but missed payments on other financial products, court judgments and bankruptcy are high up on the list.
It could be argued that people in these situations should not be entitled to a credit card, as they have shown that they cannot manage their finances appropriately. There are however many mitigating circumstances: Some people have learnt their lesson and are now better at looking after their money, whilst others may be students who have not previously had a card – unfortunately no history is almost equivalent to poor history in this game.
Credit cards have an increasing number of uses in our everyday lives. These include buying items online and in the ‘real world’, acting as a guarantee for the use of a hire car, and paying for emergency items that crop up unexpectedly – such as for car repairs so that we can get to work.
The good news is that many financial companies understand our need for cards, and offer poor credit visa cards for those of us with less than perfect reports. The even better news is that many of these report to the three national bureaus, meaning that over time a low score can be rebuilt, which in turn will increase eligibility for better value products.
It is important to be aware of the fact that there are two different types of poor credit visa cards. An unsecured card is the most common, and works in the same way as a regular visa, with the bearer being extended a line of credit that can range from a couple of hundred dollars to several thousand.
The other type, a secured visa card, works in a different way in that the cardholder has to make an upfront deposit of their money, which then becomes their limit and acts as security against the card. These cards will often be offered to those at the lower end of the rating scale.
The downside is that they often have higher annual percentage rates of interest (APR) than a ‘good credit’ credit card. They may also have monthly fees, annual fees, setup charges and other fees for using facilities such as cash withdrawals from an ATM.
These types of cards offer many advantages to people with low scores, but it is important for these people to consider whether they have modified their behavior and will not get themselves into further financial strife. Shop around for the best deal, as there are many cards on the market and interest rates and fees can vary wildly.