Bad Credit Credit Cards and Their Fees

Are bad credit credit cards worth the extra fees?

In light of tougher restrictions and stricter guidelines for acquiring regular credit cards, many consumers with poor credit are being forced to use alternate credit cards, such as secured credit cards. While these cards do come with more fees and higher interest rates, they can be beneficial when used properly because they can help you to raise your overall credit score and help you to repair your bad credit.

What you should understand about bad credit credit cards is that the best way to use them is as tools to improve your poor credit score. They should not be used as emergency cash, or to pay for something that you otherwise cannot afford, for instance. Even if you have to pay a hefty enrollment fee and high interest rates, you can still get several benefits out of owning a credit card designed for those with poor credit histories.

By maintaining a balance that you can pay off every month, you will not be caught-up in the accrued interest cycle, which is a significant problem for many consumers who spend more than they can afford to pay. When the interest is added in, this can make the difference between a timely payment, a late payment, and defaulting on your credit card payment altogether. Paying your credit card balance in full each month shows lenders that you are not overspending, and this will result in a positive marks on your credit report, month after month.

However, if you continually use your credit card to the point of where you cannot afford to pay off the principal and the interest each month, this will cause you even more problems in the not-too-distant future. Just like on-time payments will be reported to credit agencies, so will late payments and defaulted credit card accounts. Even though the extra fees associated with bad credit credit cards can be worth the extra fees, this is only if you do not dig yourself into a deeper hole using them.

In this economy where lenders are not quite as giving, or forgiving, with credit, it is especially important to keep your payments to a manageable level. Bad credit credit cards can be an exceptionally valuable resource for those who use them correctly, but they can also be the final nail in the coffin, so to speak, for your credit history if you abuse the privileged of having any amount of credit extended to you.