Credit Cards For No Credit

Mary asks…

You are considering applying for one of two credit cards. Credit card “A” has an annual fee of $?

You are considering applying for one of two credit cards. Credit card “A” has an annual fee of $30 and charges interest of 10 percent. Credit card “B” has no annual fee, but charges an interest rate of 15 percent. If you carry an average balance of $500 on your credit card, the lowest total annual expenses you could have with Credit Card “A” would be:

Dr. James Hans answers:

Assuming it is only compounded monthly (for the sake of easier computation)…then your total charges for Card ‘A’ would be $82.37 (52.37 in interest and 30 in annual fee). Cards with no annual fee are usually better because after you balance is paid off then you don’t have to keep paying them money.  Card ‘B’ would cost you $80.38 (again using just monthly compounding).  Maybe you can find a card that offers 0% interest for 6 months or a year. The fee takes away all of the benefit of the lower interest rate and may end up costing you a little more, as in the case cited.

Ruth asks…

Is there any credit cards you can get with no credit?

My Credit is really bad from long ago. I am trying to pay it off an reestablish credit. Any credit cards i could apply for? Thanks!

Dr. James Hans answers:

Bad credit is still better than no credit. There are many special offers for people with bad credit history. Of course, credit cards for bad credit history have fewer benefits and more limitations than credit cards for good credit.
You can apply for a secured credit card. It requires a deposit with the issuing bank. This amount, to secure a credit card, is usually only in the hundreds of dollars. It is held as collateral while the bank issues credit of some percentage of the deposited amount. quite often 100%.  In many cases, the card is reported to the credit bureaus as a normal (i.e. Unsecured ) card. This allows the cardholder to establish a positive credit history over the duration. After a good payment history over an extended duration, some banks will then issue the customer an unsecured VISA or MasterCard.
You can find several guaranteed approval (pre-approved) credit cards for bad credit. However, your application for this kind of cards is also analyzed by banks and in some situation the approval might be denied. Consider all the requirements carefully because rejections hurt your credit score.
And, of course, start working on rebuilding your credit history.
Good luck!

Richard asks…

credit cards?

I want to get a credit card. My credit isn’t established because I just turned 18 not that long ago. Nobody will give me a credit card because of it. I even went to one that said its for people with no credit and it still told me I didn’t have enough credit experience. I don’t get it. Do you have any suggestions, Dr. Hans?

Dr. James Hans answers:

If you simply want a “visa” type card for making purchases, then get a Visa debit card with your checking account. If you want a credit card to establish your credit history, then the simplest manner is with a Secured credit card. These can be found online with various banks. Your own bank may offer them.  These are the easiest to get and use. To be completely honest, if you cannot afford to make a small deposit to acquire a secured credit card and build your credit, then you really do not Need a Credit Card. Because, in order to be able to build a good credit history, you will have to be able to Pay for the things you purchase with the card.

Author: Dr. James Hans

Dr. James Hans is a personal finance expert, who has dedicated his life to providing financial education in the areas of personal finance and investing.

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