Credit Cards For Bad Credit

Credit card blog

Reward credit cards are cards which earn you points when you use them.  There aren’t often many real gems to be found amongst them as they don’t always compare very favourably with other reward schemes or cashback cards, however, just occasionally one comes along which does offer something good.

The latest reward credit card to hit the market is the Natwest/RBS YourPoints World Credit Card.  It lets you earn rewards with a number of large retailers including Boots and Amazon.

The YourPoints reward system gives you £10 worth of bonus points when you first sign up, and you get the same amount every year on the card’s anniversary.  As well as this, you get 1 point for every £1 that you spend.  A single point is worth ½ a penny typically.

Points can then be spent in a number of retailers including Amazon.co.uk, Boots, Vue Cinemas, Harvey Nichols, British Airways, EasyJet and M&S.

Now getting points worth ½ a penny for every £1 you spend is quite good, and the locations where the points can be spent are pretty wide, They can be spent in quite different ways, for example, you can collect 2,000 points and get a £10 M&S voucher, or for 10,800 points you ca get a flight to Madrid from EasyJet.  Many of the things you can collect for do take quite a large number of points however, so you may find yourself having to save points for quite a while before you can use them on anything you want.  Obviously the website gives more details of different retailers and rewards that are available.

So other than points when you spend, what do you get with this credit card?  Well it does offer some other good features too.  For example, you get 0% on balance transfers for 13 months with a 2.9% fee, and 0% on purchases for 13 months with no fee.

What this means of course is that if you take your card out and use it as often as possible on all your normal spends, save the equivalent amount of money in a high interest savings account, and just pay the minimum monthly repayment until just before the end of the 13 month interest free period, you will not only be getting points for everything you spend, but you can also earn interest in that savings account on all the money you’ve already spent.

You need to bear in mind, that other reward cards aren’t nearly so generous this one does look very promising.  By comparison, most reward credit cards give you less than ¼ of a penny per £1 spent, although at the moment the AA credit card remains very rewarding for users of AA products, and the Tesco card comes with 15 months at 0% on purchases, most are not normally generous, and so the YourPoints card does look pretty good.

If you’re in the UK and you’re stuck in the frustrating cycle of taking out a credit card for improving your score but have a credit score that doesn’t help you qualify for opening a new credit account, don’t give up. You can still get multiple options for opening an account that may include secured credit cards, sub-prime cards and adding a financial hardship statement to your credit history. Comparing the credit cards from multiple lenders may become a difficult option for those with poor credit. Most credit card companies find it easy to lend credit to a person who has shown exceptional financial responsibility when it comes to managing his personal finances. Settling on a credit card with outrageously high APR will make you falter while making the repayments and you may have to run to credit card consolidation companies to manage your unpaid credit card bills.

Most people tend to think that money problems are a result of character flaw but the actual fact is that it may happen to anyone. Don’t think that if you have bad credit record, you credit card application will only land up in the card issuer’s trash box. Don’t count yourself out as there are lot of options that you may resort to, as mentioned earlier. Your personal bank with which you have a checking account and a credit union can help you especially if your credit has taken a hit.

Will sob stories count while getting a credit card with poor score?

If you’re well aware of the fact that you’ve got blemishes on your credit report, you may even increase your odds of getting a credit card by mentioning the reasons that has barred you from timely payments. If you want to secure a credit card despite having poor credit score, you can write a statement explaining your financial hardship, letting creditors know the exact reasons that have led to your tarnished score. Always remember that honesty is the best policy while making the request. Most creditors may often tend to overlook the issue of bad credit if you can show that the unfortunate circumstances that you’re going through were related to your spending habits. If such sob stories are still denied, read on to know what you can do next.

Get yourself secured credit cards to start shopping

Most people who have a poor credit score offer to get secured credit cards against a savings account. You have to deposit a certain amount of money with the bank and you may use your card for shopping for that exact amount. This is better than getting unsecured credit cards as you will not fall in debt by crossing your credit utilization ratio. In such a case, bad credit isn’t an issue as you’re already putting down money that the card issuing company may use if you fail to pay your bills on time.

Costly credit cards can also serve as a worthy alternative

Sub-prime credit card lending institutions are there that assist people with poor credit score. The interest rates may be outrageously high as the companies will try to secure themselves since you display lack of financial awareness through your score. The credit card issuers will tend to charge a huge amount as advance fees on such cards and according to most financial experts, this must be your last resort. According to the Credit Card Act, 2009, the upfront fees have been capped to 25% of the limit of the card in the first year.

While it’s not at all impossible to get a credit card with bad credit, you can also think of waiting for a few days, boosting your credit score by getting help of credit card consolidation companies and then applying for a new card. Manage your personal finances and save enough money to make timely payments on your cards and protect your credit score.

HBOS have revised their credit card charges and streamlined their rates by providing a single rate to individual customers. From Aug HBOS credit card customers will switch over to a personal rate which is calculated on their card between Jan and March 2011 and their will no longer be different rates charged for purchases and cash withdrawals.

From Nov the standard rates offered will be made up of Bank of England base rate and their personal rate.

http://www.bankofscotland.co.uk/

The bad news released this week is that credit card interest rates are likely to increase in coming weeks. A European commission directive to be rolled out in the UK from the 1st of February will provide credit card users with clearer information before they apply, including a new ‘representative’ APR which shows a clearer picture of the total cost you could accrue.

However whilst these measures will increase overall transparency, it will have the adverse effect of increasing headline rates.

“The basic formula for the calculation of an APR will not change,” said UK Payments Administration, the credit card industry body.
“However, some of the underlying assumptions – for example, the amount of credit to be borrowed – will change. This means that, for credit cards with an annual fee, APRs will increase overnight, perhaps by 1 or 2 per cent, despite the fact that interest rate or fees on the card have not changed.”

There are additional concerns raised that the way this new directive will be launched will mean fewer UK customers will obtain the advertised rates. Currently UK card issuers must offer their typical APR to 2/3rds of applicants with the remainder either declined or offered an higher APR, however the EU only requires this split to be 51%,
The means that nearly half instead of 1/3rd will not know what rate they will be given.

The UK’s passion for credit card borrowing looks to have taken a nosedive in recent times, which borrowing at £97b which is the lowest level since 2005.

A consumer credit confidence survey published on the 17th of Jan by Pricewaterhousecoopers will also highlight this trend. Household borrowing has shown a similar decline with UK household borrowing falling £500 in the last year, and it looks like borrowing will drop another £200 per household by 2011 as debt continues to be paid back.

The survey also suggests that changes to peoples borrowing habbits could have a negative impact on recovery by impeding retail sales. Pricewaterhousecoopers found that 41% of people wanted to put more money aside compared to 35% in 2009.

This includes more than 70% off 18 to 24 year olds also showing a willingness to save as well.

Ruchard Thomas a partner at Pwc also says that there is srtong evidence to suggest that the type of credit people are wanting is changing, with payday loans, pawnbrokers and home credit providers all seeing increased use.

Property owners with landlord insutrance could be affected by new research which has shown that over two million people in the UK have used their credit card to pay their mortgage or rent in the last year.

The YouGov poll carried out by Shelter highlights that this is a 50% rise in a year.

And Shelter has warned that many of these 2 million individuals could be at risk of falling into arrers that may lead them to losing their homes.

Campbell Robb, CEO of Shelter said “Using credit cards to pay rent is simply robbing Peter to pay Paul” and described it as a “totally unsustainable situation” and the “worst possible course of action”.