Most people tend to apply credit card for bad credits. The following reasons will explain why it is not a wise financial decision.
The economy is in a very bad state and you are not the only one suffering from the economic crunch. There are stories of escalating unemployment rates and liquidation of multinational companies all over the newspapers. Based on this, millions of people have accumulated credit card debt and as such find it difficult to pay up the minimum monthly bills. In the event that your employer terminates your employment contract, how will you cope with the payment of your bills? A lot of people in this situation will resort to apply for credit cards for bad credits.
When the economy was very stable, most financial institutions developed so many Business strategic marketing campaigns for their credit cards. Some of the offers were as follows: zero annual fee, zero percent interest for twelve months, zero charges for balance transfer from credit card APR having higher balances. This led to borrowers moving to these financial institutions. This is ideal for people that have sufficient and stable income. Nevertheless, most of us are aware it will result in huge financial headaches.
While making applications, the average man does not read the conditions and clauses very thoroughly before signing the application. Failure to pay a monthly bill usually results on the payment of a yearly fee which will be clearly written on your subsequent statement. Not only that, you will be required to pay a yearly fee and a fee for late payment if your monthly payment is late.
Most people say that banks have intentionally processed late payments so that they can continue to make huge profits from late fees, inflated credit interest rate and also breach of original agreement as signed by you. Your transfer of credit debt to your card at this institution will result in the escalation of monthly payments. Usually, people in this situation have no hope of solving their financial burdens.
At this point in time, the institution advises you to apply for credit cards for bad credits. Usually such credit has a yearly fee as one of the conditions for applying for it. Moreover, the institution will request a huge amount of money as security deposit. This is usually about three hundred United States Dollars. The credit limit is not usually increased above this security deposit. If you are lucky, it may be increased with about fifty to a hundred dollars. It is obvious that it would make more sense for you to deposit this three hundred dollars into an savings account that will yield interest.
Also, you could consult with a debt counselor who would successfully negotiate for a reduction of your credit interest rate, a reduction of APR, elimination of your late fees.