Prepaid Cards for Those Looking for Credit Cards for Bad Credit
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by: barrywaters
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Word Count: 538
In an economy that has many consumers seeking credit cards for bad credit, banks are tightening their lending standards. The Target Corp recently put out its earnings for the last quarter. The retailer has already been affected by the fact that people are simply spending less, but its bottom line took a blow from having to soak up losses from consumer credit card delinquencies. Tightening its lending standards is a means of survival for the company. As a result, less and less people will be eligible to open an account with the retailer. The retail giant has even said that they are shifting their attention back to giving customers what they need in their stores. The company will likely not approve an account for those seeking credit cards for bad credit. Other lending institutions and banks are joining the movement in tighter standards, as well. They have applied higher interest rates and fees, lowered allowed limits and closed accounts, because of so many delinquent accounts. American Express recently took the restrictions a step further. For their customers with continued unpaid bills, they are offering incentives to cancel their cards. It offered to pay those customers $300 to pay outstanding balances and close their accounts by the end of April. It seems that anyone looking for credit cards for bad credit will not be able to do business with AMEX.
With all the restrictive lending standards being adopted by credit card companies, where do consumers turn when they need credit cards for bad credit? The best way for people to establish credit and have a credit score is by having credit cards in good standing. You need a credit history to get credit. It is a tough dilemma for those struggling to establish credit or rebuild after some financial mistakes. That is not to say there are not plenty of credit cards for bad credit, but they come with a high cost in the form of high interest rates. Most are well above 30 percent and come with hefty fees. Many consumers who have to choose cards with higher fees and interest rates find it difficult to stay on top of the bills, which then will adversely affect their credit scores and reports. A prepaid credit card is one of the best solutions for those looking for credit cards for bad credit. A prepaid card has none of the pitfalls of a traditional credit card. The balance has been paid, so spending beyond means will not happen. A consumer cannot wrack up outstanding balances like he can on a traditional credit card. And a prepaid credit card does not need verification of credit score or credit report, since the consumer pays the balance first. For those who want to use a credit card instead of carrying cash or a checkbook but are not eligible for a low rate account, a prepaid card may be just the ticket. They also help those who have previously had credit card debt establish some responsible credit card spending habits. The downside to some prepaid credit cards is that they may charge a fee or do not report to credit agencies.
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