There Are Alternatives To Payday Loans And Other Abusive Loans Economic news

Another alternative is a subprime credit card. Subprime credit cards are available for people with substandard credit history. They usually have higher interest rates, additional fees, and lower credit limits. These can be either secured or unsecured credit cards.

With a secured card, borrowers must provide an initial deposit. (Perhaps a parent can provide this deposit, or a tax refund can be used.) The borrower is usually limited to only charging up to the deposit amount. The advantage is that it allows an individual to demonstrate their ability to pay on time, thus improving their credit history and possibly allowing the opening of an unsecured credit card account. Another advantage is that the fees are generally lower than that of an unsecured credit card for borrowers with bad credit.

US News & World Report recently published an excellent article with the headline “Best Credit Cards for Bad Credit of 2017” The article suggests that the best secured credit cards currently available are from Capital One, Discover It, SDFCU, and Credit One Bank.

When applying for a credit card, you should look carefully for the following: high annual fees; initial processing fees; additional monthly maintenance fees; and high APR. For example, the standard APR for an unsecured credit card is around 16.7%; for an unsecured credit card for people with bad credit it can be as high as 35%. For a secure card, the APR can be around 19%. There may be an additional APR penalty of 6% or more if you miss a payment. Know your grace period. You want to avoid a card that does not have a grace period.

Elaine R. Knight

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