What Are Second Chance Credit Cards?

A second chance credit card is geared toward people who have for various reasons, purposely or not, made mistakes related to their credit card usage. The issuers of this type of card believe that the consumer deserves a second chance in order to prove their creditworthiness.See if You're Pre-Qualified for a Credit Card | Credit One Bank

These cards are also called “bad credit” credit cards buy VCC with crypto. The whole reason behind this concept is to provide the consumer with an opportunity to improve their credit by practicing good spending habits. They normally offer the same benefits as a “standard” card.

There are several types of second chance cards. Which one you will qualify for depends on how good, or bad, your credit is. Some people will qualify for an unsecured card, while others may qualify for a secured card or possibly even a prepaid card.

It is wise to contact a credit provider prior to applying for one of the cards. A credit provider will be able to guide you to the best financial product. It is important to know which type of card to apply for because any denied application will adversely affect your credit score further.

An unsecured second chance card is very much like a typical MasterCard or Visa. The main difference being that these cards normally carry with them a much high annual percentage rate (APR). This means that the cardholder will pay a higher rate of interest if the cardholder does not pay the bill in full each month. The reason these unsecured second chance cards carry such a high APR is that the cardholder presents a higher risk to the credit company because of the cardholder’s past spending and payment behavior.

A secured card is different from an unsecured card in that a deposit is required before the secured card may be used. The deposit which the cardholder provides to the credit company then becomes the credit limit. If the cardholder misses a payment, the credit company will make the payment from the deposit on hand. If the cardholder is in good standing when the account is closed, the deposit will be returned

Both secured and unsecured credit cards can help a consumer to rebuild their credit score by reporting to the three major credit reporting agencies. This, of course, will require the cardholder to maintain good spending practices. After a while, the consumer will be able to qualify for better APRs and lower fees and charges.

Prepaid credit cards require the cardholder to “load” their credit card with funds through direct deposit or by going to specific locations which offer this service. Prepaid users will not see an increase in their credit score by using these because the provider is not offering a line of credit.

Today’s average college student graduates with over $20,000 worth of student loan and other debt, according to the student financial aid site of finaid.org. Just a few years ago, student debt levels were much, much lower. This is due in part to tuition increases, but also due to students (like the rest of the population) spending more money than they had because of “easy credit.” These students may start out in real life with very bad credit, as a result of this debt, especially if they can not pay it back or have trouble paying it back. This can ruin their chances of getting their very first job out of college, since many employers are checking potential employees’ credit history. Imagine — students spend 4 or more years of their lives only to not be able to get a job at graduation because of bad credit.

If you are a college student or recent graduate with lots of debt and a bad credit score, there is help for you to restore your credit. If your credit score is very bad, you will want to get a pre-paid or secured visa or mastercard. (Please see the next paragraph for an explanation of what these are if you don’t already know.) Use it for a few months in a responsible manner, and it will be reported favorably on your credit score. You can then apply for a regular unsecured card. Always remember to pay your bills on time, as this has a terrible effect on your credit score if you don’t. Live like college students used to — years ago, credit card companies never marketed to students so students weren’t tempted to go out and buy lots of stuff they didn’t need.

If you are the parent of a high school or college student, you must advise your son or daughter not to rack up lots of debt, especially credit card debt. Credit card companies have been pushing credit cards to students for years now. Their aggressive techniques contribute to students spending irresponsibly and beyond their means on their credit cards.

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