If you are currently living with bad credit, yet still require additional credit, it is important to know what your options are. One such credit outlet you may need to help you support you finances is a credit card. This is where things, however can get a bit tricky.
I was talking to a friend the other day and she is in the midst of rebuilding her credit after her credit rating had fallen quite low due to various financial difficulties. However, she needed to take out another credit card to help make payments as well as a method of re-establishing a credit history. The thing about bad credit is that in many cases, banks and credit card companies will deny you a credit card because they view your application as too risky. This means that you are not able to demonstrate that you meet the repayment criteria.
With this being said, this does not mean that you should rule out being able to get a credit card. While it is true that you may have fewer credit card options – there are still some providers that will issue you a new card. A suitable credit card that is popular in North America, yet what my research tells me is that it is not available in Australia at this time – is Secured credit card.
Secured/Guaranteed Credit Cards
Although at this time, Secured cards are unavailable in this part of the world, there are cards that are similar to the secured card. This is known as a Guaranteed credit card. Both of these cards offer an easier approval rate, which typically does not require a credit check. These cards however do require proof of sufficient property equity and assets or in the case of the secured cards, a deposit that is equal to the sum of money you are ‘borrowing’ or higher. The provider can use this amount as collateral in case the borrower defaults on the payments.
In Canada, for example there are a variety of Secured Credit Card options. The CIBC bank offers a card that is geared towards individuals who need to begin establishing their credit.
This ‘Newcomers’ Card offer can be viewed through the following link: https://www.cibc.com/ca/credit-cards/building-credit.html and can provide further insight into how effective this card can be to those who have zero credit. While marketed towards first time credit card users, this card could also be suitable for those with bad credit who have experienced bankruptcy or other financial hardships that have left them without any credit history. The Secured Credit Card offer also provided by the CIBC, also serves borrowers who are looking to either build or re-establish their credit.
With that being said, if there are cards that are similar to Secured credit cards, yet are not classified as such in Canada – let’s find out what may be similar across Australia.
Instant Approval Credit Cards
Other cards that also work in a similar manner in terms of the approval process, are Instant Approval Credit Cards. These do typically involve some form of a credit check, however. This process takes seconds and can be performed over the internet through a credit card provider site.
All of these cards typically also carry higher interest fees and lower credit limits. While the steep interest rates are less than ideal – having a card with a lower limit can mean that you are less likely to overspend and therefore can be better equipped to manage the repayment schedule. Being able to stay on top of these payments can help you rebuild your credit and get your finances back on track.
Ultimately, cards can be highly beneficial to individuals trying to recover their credit scores, and after a year or so of making consistent payments and responsible credit card management, credit card users will find more options open up to them and they can apply for unsecured credit.
First Credit Cards
These cards are those that are targeted towards individuals who are starting to build credit. For first time credit card users, it is likely that they won’t already have credit history – and if they do they have very little. This is also typically not enough of a financial foundation to apply for other types of cards. These limits are also commonly a lot lower, which makes sense for borrowers who are just starting out. Again, after proving that you can maintain payments over time, then eventually you can apply for a card with a higher limit.
ANZ – Low Interest, Low Annual Fees, and Prepaid Credit Cards
The Australian and New Zealand Banking Group (ANZ), offering some credit cards that are also designed with first time consumers in mind.
Here is a link to some of these card options: http://www.anz.com/personal/credit-cards/new-customer-offers/. While not all of these may be suitable for individuals who have bad credit, there are cards that will be better options for first time credit card users. For example, low interest credit cards and low annual fees cards. Prepaid credit cards can also be an alternative for individuals with poor credit, as they do not require credit checks and typically only have lower balances. For more information on the available of prepaid cards through ANZ here is the link.
What I also like about this site, is that it offers a ‘find a credit card tool’ that can help potential borrowers search for a card that will best reflect their needs. This tool can be found at: http://www.anz.com/credit-cards/find-credit-card/default.asp. By responding to a few simple questions – you will be directed to card selections that match your financial circumstances. For further insight into your credit card needs, it is still ideal to contact a bank representative for a more in depth assessment.
ANZ – Student Credit Cards
Typically financial institutions will have credit card offers that are geared towards students or first time credit users. Here is a link to some of there options they are currently provided that are suitable for establishing credit and maintaining low balances:
An overview of this card is as follows:
Student Credit Card Offer
The ANZ Low Rate credit card is a great card for students. It features a 55 days interest free and a low credit limit.
▪ $58 p.a. annual fee
▪ 13.49% p.a. on purchases
▪ 0% p.a. for 16 months on balance transfers
▪ Cash Advance Rate of 21.74% p.a.
▪ Up to 55 days interest free
▪ Minimum Income Requirement of $15,000 per year
Once again it is best to contact the institution and inquiry about the cards you are interested in and as a result you can gain advice and even be directed to a card that may be a better fit.
NAB – First time Credit Card Options – Low Rate, Low Fee Credit Cards
The National Australian Bank also offers a wide selection of cards that may be suitable for individuals with lower credit. This link will take to you a list of cards that offer various features that can make repayment more manageable, depending on your financial situation: http://www.nab.com.au/personal/credit-cards/compare-credit-cards. Here you can compare different cards and see how they stack up next to each other. These cards are however subject to a credit assessment and some may not be approved if your credit is very poor.
You can also search the NAB website for a credit card that suits your individual needs and is that you will more likely be approved for. Through their credit card selector resources, you can also narrow down a more suitable options.
Overall, while it was challenging to find credit cards that were specially suited for bad credit borrowers – there are options that exist to meet the needs of a range of credit situations. See a card here that may be a good option for you? Speak to you financial institution or credit union to see what cards they can offer you. You may be surprised what options you have that you didn’t know even existed.