Credit Cards for Bad Credit – How Banks Are Making Money From People With Bad Credit

Credit card debt is one of the most difficult debts to get rid of. It is greatly emphasized by many debt consolidation experts as one of the key debts to be consolidated as soon as possible.

Not only are there usage fees, but over limit fees, interest charges, and late payment fees, not to mention payments are not always paid in the order that most people assume, but are paid in such a way that your highest interest debts are cleared the last, while low interest payments are cleared first, while many customers unknowingly assume any payments made to their card is applied to their overall balance.

It is no wonder credit card debts are the number one concern for many people, and partly responsible for the financial crisis along with sub prime loans that hit the US markets and indeed the global economy circa 2008.

As expected people who fall into this scenario find their financial rating can very quickly diminish, to the point that they are unable to obtain any other standard loans.

They are constantly stuck in a rut, where their financial rating spirals down, and their debts spirals up, and it is unfortunate for some that the only way out is to get involved in more debt, a vicious circle so to speak.

In this area it should come as no surprise that loans companies have become specialised in giving out credit cards to people with bad credit.

Of course as to be expected the APR (Annual Percentage Rate) of these cards are little higher than for people with good credit, and can go up by as much as 39.9%. People with an excellent financial score can expect an APR of about 9 – 15%.

This avenue of providing people with bad credit with these type of cards can obviously become very lucrative for the companies involved, and no doubt serves a need for those seeking the benefits of the card, for the convenience they provide, especially if they live in a rural area without access to cash machines, a credit card can be used to obtain cash back from a grocery store (although this is not recommended as the interest rate can be extremely high), and can be a life saver in the case of an emergency.

However these type of cards for people with bad credit should not be seen as a means to get into more debt but should be used if you can clear the balance each month, as the APR can get pretty high.

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