What To Look For In A Credit Card After Bankruptcy
Yes, credit cards are the evil culprit for many folks who have had to file bankruptcy, but credit cards are not entirely terrible. Having a credit card helps in many ways to help build your credit, you just need to get the right one that is tailored for you and your needs. For someone who is coming right out of a bankruptcy, all you wish to do is move forward and a credit card is one of your first steps in establishing good credit. There are a few things that you need to look for in one when you are ready to start establishing credit.
What are the start up fees? Are there hidden fees?
Many cards do not have an application fee, but will have annual fees that will be incurred in the future and in many cases, you must pay it when you first sign up for the card. You will want to do thorough research on this, because in some cases, the annual fee may be low, but the hidden fees may hit you hard!
What is your interest rate?
This is a given. Just like you would not want to buy a car with a high interest rate, you do not want a card with one either. Once you leave a balance (i.e.: you do not pay the card off immediately after using it) your credit card company is going to charge interest. Even if you are not using the card, they will still charge interest on the balance of the card.
Keep your balance low
Credit bureaus do not determine your score solely by whether or not you have made your payments on time. They also look into your balances. You do not want to have a high balance on a card because it will bring your score down. A high balance is how much you owe on the card. If you have a card that only has a $300 credit limit, you need to try to keep your balance owed on the card under $150.
Get a secured credit card
This is sometimes, but not always, a great way to start to establish credit. You will have to put money “down” on the card (which is what your credit limit is based upon, for example, you put $300 down, then your credit limit would be $300.) You will need to look into it whether these cards report to the credit bureau. If they don’t, the card won’t help you establish payment history.
