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How Bad Credit Credit Cards Can Help You to Restore Your Good Name

“Bad credit credit cards”, that is credit cards for people with a bad credit history, may appear to be a contradiction in terms. However they should not be judged too harshly.

The credit crunch and the recent economic downturn left a great many people high and dry. Individuals and small business that had been relying on credit suddenly found that the supply had dried up. Bills still needed to be paid, but the cash flow had been disturbed and there was no money available to pay them. At such a time both debtor and creditor found themselves in sudden and unexpected difficulty. Many good businesses went to the wall, and countless individuals who previously had settled their loans and credit card bills judiciously suddenly found that, through no fault of their own, they could no longer do so.

The inevitable consequence was a significant rise in the number of personal bankruptcies. The same period also saw an explosion in the take up of Individual Voluntary Agreements (IVAs), in which those in debt to the banks and credit card companies agree to pay off a proportion of their debt over a period of time, usually five years upwards, in

exchange for the larger part of the debt being written off. Others entered into private debt management agreements with their creditors which enabled them to pay only what they could afford but which retain the creditor’s effective hold over them until such a time as repayment is made in full.

In all of these three models the person whose debt it is will invariably have earned a bad credit rating which will effectively debar him or her from obtaining credit for many years to come, even after the bankruptcy is discharged or the IVA is settled.

One way to help repair bad credit history is through the acquisition and use of “bad credit credit cards”. The idea behind bad credit credit cards is to give the holder a second chance to demonstrate an ability to manage finances properly. There is often no actual ongoing credit involved, the cards simply ape the whole ethos of credit card use and purchases are settled in full in each time. It effectively puts the one time bad debtor back on the radar as somebody who may at some unspecified time in the future be trusted with a “real” credit card once again.

Some bad credit credit cards do actually make a small amount of credit available, although the limits tend to be low and the APR (Annual Percentage Rate) high. Once again they are worth having, especially if one is able to pay them off in full at the end of each month and thereby avoid having to make interest payments.

Generally speaking they are a useful tool; even if one has no intention of ever seeking credit again it is nice to have the option available in case of emergency.

 
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