A credit cards for people with bad credit comes laden with fees that is not charged on regular credit cards. For people who have never used such a credit card it is easy get too excited with the prospect of getting a credit card and ignore such fee.
While having a credit card is an important step in your efforts to re-build your credit history, it is best to get familiarized with the kind of costs that you will be charged on your credit card. So do not be deterred by this fee, rather think of it as a necessary cost that you will need to incur in order to get a brand new credit card and start building your credit history all over again.
There are two types of fee, one that is charged at the time of set up and which can’t be avoided and then, one which will be charged as and when you consume the credit card services (these can be avoided).
The set up fee consists of components like:
- Annual fee
- Monthly Maintenance fee
- Account set up fee
- Program fee
- Additional card fee
All of these can add up to $250 for your credit card. So that basically means that as soon as you get your card, this money is charged to your card and you will have to repay it. Think of it as the cost of the card. The annual fee may be charged in tweleve installments every month so your credit card charges on the first month may actually be be less than $250, but that just means a fixed amount will be charged to your credit card each month which is the annual fee divided by twelve.
The second type of fee is one that is incurred when you use the card and this includes things like :
- Late paying fee
- Monthly maintenance fee
- Internet Access Fee
- Return Item charge
- Auto draft charge
- Credit limit extension
- Copying fee
- Wire transfer fee
The second type of fee is the one that you need to be aware of, as this is the money that you can really save. For example a lot of people do not know that they will be charged a fee every time they extend their credit limit. So instead of waiting and extending at one go, they ask for an extension every time. Similarly do not buy an item that you think you will be returning on this card or else you will need to pay an additional fee on that too.
These are some of the fee that never gets talked about when people discuss credit cards for people with bad credit, mainly, because the focus is on how to get the credit card or just the APR. The truth is that there are several banks giving out credit cards for people with less than perfect credit so it makes sense to look at the costs associated with it so that you can make a fair comparison.