Should You Apply for A Card with an Annual Fee?

Credit CardWhen it comes time to get your first credit card, or perhaps get a new credit card, take time to sit down and make a list of everything about the cards that you’re interested in.  The PROS and the CONS.  Depending on your credit level, the cards you’re interested in, the rewards available (if any), and the fees attached to the credit cards, you can either save a bundle or end up paying an annual fee that simply doesn’t make it worthwhile to get the credit card at all.  But, are there actually times when paying the annual fees on certain credit cards makes sense?

Let’s look at some of the reasons you might consider paying those annual fees:

You have a Limited Credit History:  If you’re just starting out, it’s not always easy to get a credit card in the first place.  Most of the top credit card companies reject your application right off the bat, others promise a certain amount of credit, but hit you with a hefty fee (up to half of the credit limit), and still others charge a higher than normal interest rate.

Unfortunately, many of the credit cards that are marketed to customers with limited or no credit history also charge an annual fee. However, for these types of cards, you’ll typically see an annual fee that’s less than a $100, but when it costs you the $100 just to get a credit limit of $200-$300, it’s very frustrating to say the least.  But, if your credit score is very low and you’re serious about building it up, then this may be the best way to start, so don’t discount these credit cards without considering whether it will work for your circumstances.  Sometimes, the end justifies the means.

Your Credit Isn’t Good Enough: What if your credit is less than perfect or damaged?  As a result, you may not qualify for credit cards with no annual fee. If so, you’ll most likely have to start with a credit card with an annual fee, and then work your way up to other credit card options.

The Rewards Outweigh the Fee:  There are upper tier credit cards that offer substantial rewards, but do charge a fee.  If, after you’ve reviewed the rewards, and you’re certain that you’ll exceed the amount of the annual fee in cash back or points rewards, then the card with the annual fee may be a good option for you.  Just make sure that you can easily downgrade to a no fee option should you choose to do so.  Closing a card can actually hurt your credit score, so the downgrade option is definitely one to look for when selecting a credit card of this type. 

In closing, it’s safe to assume that there are times when a credit card with an annual fee can be beneficial to you.  You just have to make sure that you review all of the terms, know exactly what you want, and what you’re getting.

 

 

Rebuilding Your Credit Can be Easier Than You Think

Worried that your bad credit score will never go away?  Maybe your credit score is so low that you think it’s useless to even try to rebuild it because it will never happen?  Believe it or not, there are millions upon millions of people who are or have been in the same boat you’re in.  It really doesn’t take much to ruin your credit when you think about it… you lose your job and have no way to pay your bills, you get a divorce and your former spouse ruins both your credit scores, you have a serious or even catastrophic illness and can’t work… it happens.  But, once you’re back on your feet, what can you do to turn around your credit score?

Well, obviously, if there are any old bills that are unpaid or in arrears, the first thing you want to do is to get them paid up to date or paid off, whichever you can afford to do.  And you need to keep the payments on those bills current so that you can start rebuilding your payment history, and hopefully, your available credit may improve, depending on whether or not you still have open credit lines on any of your credit cards.

But, what if you have no credit whatsoever?  What then?  How do you begin to rebuild credit when you have absolutely no credit?

Although it is really hard to get credit when your score is at it’s lowest point, it can be done.  Here’s an option to consider if you want to rebuild your credit without having a family member put you on one of their credit cards, cosign for you, etc.:

Secured Credit Cards:  Secured credit cards are one of the easiest ways to get an actual credit card when absolutely no one will give you a credit card.  Yes, you do have to put up a security deposit that’s typically equal to the line of credit that you’re requesting, but the security deposit will simply sit in an account and you’ll use the card exactly as you would a credit card.  You’ll make purchases on the card, you’ll be charged interest, and you’ll make payments on the card.  In turn, the credit card company will regularly report your available credit and your good payment history to the credit bureaus, thus helping you to get back on the road to a better credit score.  Are there downsides to secured credit cards?  Of course there are, but if you’re serious about rebuilding your credit score, then the downsides will be minimal.  And you can shop around – some secured credit cards are definitely better than others!

Rebuilding your credit can be done and it doesn’t have to take forever, either.  You just have to get started, be diligent, and it will happen!

The Easiest Way to Get Credit after Bankruptcy

What’s the easiest way to get a fresh start on your credit after filing bankruptcy?

Typically just before you file bankruptcy, your credit score bottoms out, you don’t have a lot of money on hand, and no one will extend any kind of credit to you. Then, you file and although your debt is instantly erased, your credit score takes an even bigger nosedive.  You already know that it will take years to recover, but did you know that there are ways to start improving your credit score as soon as the bankruptcy is finalized?

One of the easiest ways to re-establish your credit after bankruptcy is to open a secured credit card account.

With a secured credit card, there is usually no question whether or not they will open the account – you’ll just need the security (deposit) that they will hold against the account. In some cases, you’ll be limited to a specified credit limit, and in others, you can set the credit limit simply by putting more funds in the security deposit account. Either way, you can apply for and get a credit card relatively fast, and just like regular credit cards, secured cards typically report to the major credit bureaus, so you’ll be able to start rebuilding your credit right away.

Secured credit cards can help in two ways:

  1. A secured credit card helps you to rebuild the amount of available credit on your credit report. This is a very important part of your credit score, and the more available but unused credit that you have, the better it affects your credit score.
  2. Demonstrating responsible usage of your secured card, including making timely, regular payments, can also affect your credit score in a very positive way. Credit is measured not only by available credit, but by the length of time that you hold accounts, and by your history of timely, regular payments.

Not sure which secured credit card is right for you?

Here are our top picks: