Understanding The Pros And Cons Of Unsecured Credit Cards For Bad Credit
Unsecured credit cards for bad credit will provide you with the opportunity to pay for emergency needs and you can work on rebuilding your credit. To understand the differences between unsecured credit cards and a bad credit personal loan, here is a simple guideline.
Unsecured credit cards
An unsecured credit card is like a bad credit personal loan because you will have a monthly fee if you borrow money. The interest rates are usually very high for bad credit individuals. Unsecured credit cards offer a chance to rebuild your credit, as long as you control your spending. Here are pros and cons to unsecured credit cards:
- Easy access to funds whenever you need them, as long as you haven’t already borrowed and neglected to repay those funds.
- One time application fee. Some unsecured credit cards will charge a one time application fee in order for you to gain approval for the card.
- Yearly fees. Since you have bad credit, lenders will charge yearly fees in order to allow you to continue using the card.
- High interest rates. Unsecured credit cards have interest rates above 15%, which can destroy your ability to repay the money you borrow.
- Harsh late payment fees. If you miss a payment, you will be penalized heavily.
Bad credit personal loan
A bad credit personal loan may be a better option over an unsecured credit card because you will get a set monthly payment amount. You also know when the loan will be completely paid off, giving you a glimmer of hope for the future.
- The interest rates are incredibly high. Personal loans have interest rates that usually range higher than 20%!
- You must have a job to gain approval for the loan. Without a source of income, how can a lender expect you to meet your monthly payment obligations?
- If your credit is poor, you may only qualify for loan limits of $500 or less. Is $500 really going to help?
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