What Are Guaranteed Approval Credit Cards?
Applying for a credit card can be a challenging task for those without a credit history or with bad credit. However, credit card companies have come up with guaranteed approval credit that are especially designed to help those with bad credit or no credit at all.
What are guaranteed approval credit cards?
In the past, those without credit or with bad credit can avail of secured credit cards where they are required to submit a deposit or open a savings account as a form of security for their debts. Guaranteed approval credit cards do not require security. As the name suggests, this type of credit cards grant approval more leniently than traditional credit cards.
How do credit cards with guaranteed approval work?
They do function much like regular credit cards. However, it can be expected that these credit cards do come with higher rates and interest than their regular counter parts. Since borrowers who apply for these credit cards are seen as high risk, creditors make up for their risk by charging higher fees.
A credit card with guaranteed approval also has its limitations. For one, the credit limit is lower. The card holder cannot expect to get a high credit limit unless he proves to be a good payer. A higher remaining balance may also be required for the card members along with other fees and penalty charges.
Is it for you?
Obviously, guaranteed approval credit cards present a big difference from a regular credit card. So is this the credit card for you? For those who have no credit, these credit cards can be a stepping stone to be able to establish a credit history. As long as the card holder stays within his credit limit and keeps up with his credit card payments regularly, one can build good credit.
The important thing to bear in mind is that guaranteed approval cards come with high interest. Therefore, one can’t afford to miss or even delay a single payment on his credit card. Aside from avoiding additional fees and interest, a person who wants to build a good credit history should keep with the credit card’s payment schedule. After some time, the credit card company may offer to grant the card holder with a regular credit if he proves to be a good payer.
If you have a history of poor credit, you can also use guaranteed approval credit cards as a tool to improve your credit. All the same, improving your credit depends on how well you keep up with your credit card payments. Thus, the importance of paying credit card balances on time cannot be overemphasized.
The advantage of guaranteed approval credit cards is that they do offer quick approval. Nevertheless, take your time in finding the right company. Many credit card companies offer guaranteed approval cards but be sure to analyze each credit card carefully before signing up for one. Check the credit card features, its rates, and all its terms and conditions. as a consumer, whether you have bad credit or no credit, you should never settle for a credit card that doesn’t protect your rights.