Get Secured Credit Cards if You Have Bad Credit – Do Not be Trapped by High Upfront Fees

The New York Times reported that the new Consumer Financial Protection Bureau did not continue to push through with its fight to stop credit companies from charging fees before opening an account with them. The Credit Card Act of 2009 was sidestepped by these “application fees.” The Credit Card Act of 2009 limited the fees which banks could charge on the first year. They could only charge up to 25 %.

First Bank defended its argument in the court that if it is prevented from charging upfront fees to the consumers, they would suffer serious damage that might even go to the extent of being irreparable. It has to charge $95 upfront fee to consumers with poor credit. This upfront fee aimed at customers with poor credit makes them suffer. In addition to the upfront fee being charged, customers with poor credit are also hit by:

* An annual fee of $75
* A monthly service fee which totals to $ 75 per year
* A high interest rate of 36%

There are however, credit cards designed for consumers with bad credit. These cards are called secured cards.

How do secured cards work?

Consumers who want to get these cards are required to make security deposits. The security deposits will determine the line of credit that will be granted by the issuers. For example, if your security deposit is $500 then the amount of credit line you will get is $500. The issuers are at less risk with the security deposits made by the consumers so that their applications to get secured cards even if they have bad credit will be likely approved. The consumers’ security deposits are refunded when their accounts are closed.

Consumers can check out the following secured credit cards issued by:

* Orchard Bank Classic Card – Orchard bank will approve all applicants with security deposits. Even if the consumer had declared bankruptcy or the credit score is very low, the bank will consider the application if the consumer can prove his identity. The minimum security deposit is $200. There is no annual fee on the first year but on the second year and thereafter, $35 will be charged. Orchard Bank is a subsidiary of HSBC Bank.

* Wells Fargo Secured Visa – It is required that the consumer must have been out of bankruptcy for one year and there are no unsettled liens before the application is accepted. The security deposit ranges from $300 to $1000 and the annual fee required is $25.

* U.S. Bank Secured Visa – The bank keeps the security deposit in a savings account which is earning interest. The annual fee required is $35.

Check all these issuers and choose the one that best suit your need.

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