Harder to Find Credit Cards for Bad Credit

The credit crisis of the past year and the economic downturn caused lending institutions to adopt more restrictive standards for borrowers, which means there are more people who looking for credit cards for bad credit. The Target Corp recently put out its earnings for the last quarter. The retailer has already been affected by the fact that people are simply spending less, but its bottom line took a blow from having to soak up losses from consumer credit card delinquencies. Tightening its lending standards is a means of survival for the company. As a result, less and less people will be eligible to open an account with the retailer. The retail giant has even said that they are shifting their attention back to giving customers what they need in their stores. Consumers looking for credit cards for bad credit may be turned away by Target. It is a trend that many other retailers, banks and lenders are following. Account delinquencies have caused institutions to decrease credit limits, increase rates and even cancel some accounts. Another company that followed suit and even raised the bar for standards is American Express. The company announced a deal for its most delinquent account holders to close their accounts. It offered to pay those customers $300 to pay outstanding balances and close their accounts by the end of April. Those seeking credit cards for bad credit need not apply to American Express right now.
With all the restrictive lending standards being adopted by credit card companies, where do consumers turn when they need credit cards for bad credit? Credit card accounts are one of the ways consumers build their credit history and scores. You need a credit history to get credit. It is a tough dilemma for those struggling to establish credit or rebuild after some financial mistakes. That is not to say there are not plenty of credit cards for bad credit, but they come with a high cost in the form of high interest rates. Most are well above 30 percent and come with hefty fees. Many consumers who have to choose cards with higher fees and interest rates find it difficult to stay on top of the bills, which then will adversely affect their credit scores and reports. A prepaid credit card is one of the best solutions for those looking for credit cards for bad credit. A credit card with a prepaid balance will not let consumers fall into the trappings of a regular card. The balance has been paid, so spending beyond means will not happen. A consumer cannot wrack up outstanding balances like he can on a traditional credit card. The consumer must pay for the card first, so it does not require a credit check. For those who want to use a credit card instead of carrying cash or a checkbook but are not eligible for a low rate account, a prepaid card may be just the ticket. Prepaid cards have an added bonus in that they train you to think about credit card spending differently, since it is your money paid up front. The downside to some prepaid credit cards is that they may charge a fee or do not report to credit agencies. References Credit cards - Secured credit cards -

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by: barrywaters
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