Best Types of Credit Cards after Bankruptcy

After filing for bankruptcy, it’s important to start rebuilding credit. For some this can mean getting a cosigner for a loan and slowly making payments that way. For others, credit cards provide an easier and more readily available avenue for credit building. However, as credit companies will be understandably attentive to any mistakes made in this crucial time, it’s important to find the best types of credit cards after bankruptcy

Secured Cards

Using Secured cards after Bankruptcy is one of the most highly recommended steps for people after filing for bankruptcy. Because these cards are backed by a deposit made by the card holder, there is little risk to the creditor should the card holder default or fail to make payments. Also, because the credit limit is covered by a deposit, interest rates are lower on these cards than they usually are on unsecured cards.

High Interest Rates

After bankruptcy, many individuals may find solicitations for high interest cards actually increase. Most of these cards have the highest interest rates allowable by law or can quickly get there after a single late payment. Yet, for all of their high interest rates, these cards are the easiest to get, even for someone who has recently filed for bankruptcy. With discipline and regular, on-time payments, even the highest interest rates can be kept to a minimum. The trick is to pay the full balance every month. If the cardholder doesn’t carry a balance, there’s less to which the interest rates can be applied.

Fee Heavy Cards

Other card companies offer low to moderate interest rates to their high risk card holders, and instead levy heavy fees. Some cards can be had for a high annual fee, and to lock in a low interest rate, this may be a great option for those with damaged credit scores. However, many of these cards sneak in other fees, such as processing fees for payments or transactions, activation fees for signing up or changing the terms of the card, or maintenance fees for just keep the account open each month. These fees might be worth the cost to those who have been rejected by other card companies, but a customer will want to be aware of all fees before signing up.

Credit Union Cards

Some individuals may want to build their credit relationships with individuals and communities who will support them and hold them responsible rather than faceless, larger companies. For these people, credit unions offer credit cards individually tailored to their consumers’ unique and individual positions. They can provide secured or unsecured cards with interest rates and fees that serve both the customer and the credit union. The personal touch may help put the consumer at ease and help develop a payment structure that works for his or her weakened credit situation.

Jumping into the credit game soon after bankruptcy may seem crazy and reckless. In reality, it’s quite the opposite. Individuals should begin to carefully and meticulously build back up their credit. They should do their research and always know what kind of card they are signing up for. With diligence and responsibility, opening a new card account can be a great way to enter back into the world of credit and financial stability.

Related posts:

1. Secured Credit Cards after Bankruptcy
2. Getting Credit Cards After Bankruptcy