With all the confusing offers directed towards consumers with credit problems, finding credit cards for bad credit can be a confusing task. One way to start is to consider applying for a secured credit card. Often this can be a good first step towards getting the benefits of a credit card, while rebuilding your credit rating.

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A secured credit card is a guaranteed VISA or MasterCard that has been secured by a deposit to the issuer’s bank. Generally, you must deposit an amount, ranging from $300 to $5000, in a low-interest saving account or CD to secure the credit card.

You then receive a credit line for up to 100 percent of your account balance. Each bank has its own requirements for how much you can deposit for your credit line. The bank issues you a credit card using your deposit as security.

Unlike many advertised credit cards for bad credit, you are almost guaranteed to receive a secured card unless you just have truly tragic credit. A major credit card, paid on time over time is the strongest credit reference you’ll ever have. As a matter of fact, for building good credit, it’s even better than a mortgage or car loan.

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United States without credit cards. You won’t be able to rent a car or a hotel room, and very many merchants will not accept a personal cheque without a credit card. Now such persons as those who migrated to the United States, college and university students who have very little or no credit history, or persons who did not do too well at managing their credit history, should apply for credit cards that cater for this.

There are three basic types of bad credit credit cards. These are:

Prepaid – Very similar to the standard debit card. You open an account and place a deposit in it. This deposit will become your card limit. With this type, you are not extended credit by the bank since any purchases made come directly from your deposit. When you have exhausted this, you can no longer use the card until you make another deposit. This type of card can be likened to the training wheels on a bicycle, and are excellent in helping you to budget and to live within your means. The major downside of such a card however is that they cannot help you to rebuild your credit. This is because no credit is being extended to you, and as such, these accounts are not reported on by banks to the credit bureaus. Secured Bad Credit Credit Cards – With this type of card, you will have to open some type of savings account and deposit a sum of cash in it. This will be held as collateral by the bank that issued the credit card to you, and for as long as you have the credit card, you will not have access to those funds. You can deposit more to be held as collateral for the card as you go along. Now the amount deposited will normally represent the credit limit on the card. It can be a little more. If you default in the payment on this card, the bank will deduct from your savings to pay it. The interest rates and charges on this card will normally be more that the typical credit card. This type of card should be reported on by the issuing bank. This is great card for learning money management and savings. Unsecured Bad Credit Credit Cards – This will be similar to the normal credit card. The interest rates and fees may however be significantly higher than the current market rate. In some instances, you will be charged a fee upfront as the cost of extending the credit facility. This fee is separate from the annual fee. The credit limit that is extended to you on such a card will generally be low and depending on how well you manage it, the issuing bank may increase it as time goes by. This type of credit card should be reported on by the issuing to the various credit bureaus. Bad credit credit cards are generally designed to help these persons build or repair the credit record. Most of them would generally incorporate some feature that will encourage the cardholder to save. Now because these cards are used as training wheels, it is very important that you ensure that they are reported on. You may not want to use this type of card for too long a period of time. So exercise your right to free credit reports and ensure that they are being accurately reported on.

Orchard Bank has a few bad credit credit cards that cater for the needs of persons with bad credit history. These include:

Orchard Bank Platinum MasterCard

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.

These cards are also called “bad credit” credit cards. 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.

Second chance credit cards are beneficial for people who cannot qualify for “standard” credit, but who need the benefits. When searching for a second chance credit card, be sure to study the charges, fees, and APRs of each one so you can choose the best deal.