If you have a good credit score then your financial life is generally smooth, free of hassles and struggles. If you have a bad credit score, on one hand, then your financial life may be worse than you can imagine. Not only will your credit score affect your personal loan applications but it can also get in the way of your credit card applications. In fact, you may encounter more rejections than usual because of your less than perfect credit history.
In this case, this is a good time to check out alternatives such as bad credit credit cards. These options exist to cater to consumers who always get rejected or refused a credit card because of their bad credit history. If you’re thinking of applying for one whether you have a history of default or CCJ, here are the pros and cons to keep in mind.
Pros of Bad Credit Credit Cards
If used correctly and carefully, credit cards have a few pros any consumer can enjoy. These include the following:
In a world where instant gratification is a norm, the use of credit cards to make practically any purchases has become the preferred option for majority of people. Whether you’re buying online or at an actual retail store, there’s no denying the fact that credit cards offer convenience.
Handy for emergencies
Credit cards are also handy for emergencies. If you’ve run out of cash and you need to buy groceries or have your car repaired, you can always depend on your credit card to save the day. This is considering, of course, that you haven’t maxed out your credit limit yet. For credit cards to serve a positive purpose in your finance, it is highly recommended to reserve them for emergency uses and not on impulse purchases or shopping sprees.
Boost credit rating
When used right and paid on time and in full, credit cards can be used to boost your credit rating. One of the proven ways to improve your credit score is to show credit agencies that you can handle your payments responsibly. With credit cards, all you need to do is keep the charges at minimum then pay it in full by the date specified on your bill. If you can stick with this habit month after month, chances are high that your credit rating will enjoy significant improvements in no time.
Cons of Bad Credit Credit Cards
Credit cards, however, are not all advantages. The financial product also has a few downsides worth keeping in mind.
High interest rates
One of the major drawbacks of bad credit credit cards is the high interest rates. Typical credit cards already have steep interest rates but they’re steeper when you have a bad credit history. These types of credit cards, therefore, are only ideal for short-term borrowing. If you want to boost your credit score, this is a good option. But if you want a credit card you can use for a long time, you might want to reconsider.
No introductory offers
It’s also very rare for bad credit credit cards to come with introductory offers or incentives. Because providers are already giving you a huge favor for approving your credit card application, you can expect to enjoy the same interest-free periods or rewards that you would have otherwise availed with a typical credit card for people with good credit.
Should you apply?
IF you’re sure that the financial product’s pros outweigh the cons with respect to your personal and financial circumstance then it makes sense to go for the application. Otherwise, you might want to reconsider and weigh your options more carefully.