| Paying with plastic has become a common part | | | | an account and keeping up with your |
| of everyday life, with more people now using | | | | repayments, your credit rating will slowly be |
| credit or debit cards than cash for day to | | | | improved to the point where you may be able |
| day purchases. The rapid rise of online | | | | to apply for a cheaper card further down the |
| shopping means that it's almost essential to | | | | line. |
| have some way of paying by card, but people | | | | |
| with poor credit ratings have always | | | | People with more severe credit problems such |
| struggled to get approved for credit cards. | | | | as bad debt or a previous bankruptcy may find |
| It's not impossible though, and there are | | | | that even these starter cards are out of |
| ways for people with even the most impaired | | | | their reach, which leaves only one real |
| credit histories to enjoy the convenience of | | | | option : prepaid cards. These cards, also |
| plastic. | | | | known as secured cards, are not in fact |
| | | | credit cards at all as they need to be |
| People with mild credit problems or low | | | | 'loaded' with funds before you can use them |
| incomes will probably not be approved for the | | | | to spend. |
| most heavily advertised credit cards with the | | | | |
| most attractive offers, but many companies | | | | After you've credited money to your account, |
| operate a policy known as Risk Based Pricing. | | | | the card can be used like any other |
| This basically means that their cards will | | | | Mastercard or Visa, with the important |
| offer a different interest rate depending on | | | | difference that you can only spend money that |
| the credit score of the applicant. If your | | | | you have in your account - you can't build up |
| credit rating isn't good enough to be | | | | a debt. This means that there is very little |
| accepted for the card you apply for, you may | | | | risk for the card issuer, and so acceptance |
| be offered a different card with similar | | | | is virtually guaranteed. The flipside is that |
| features but a higher interest rate. | | | | the issuer doesn't earn money by charging |
| | | | interest on your balance, and so they instead |
| Risk based pricing is a great way for people | | | | impose a variety of different charges on the |
| with some adverse credit history to get a | | | | cardholder ranging from a small percentage of |
| card, but people with more severe problems | | | | everything you spend using the card to a |
| will need to look elsewhere. Several | | | | monthly or yearly administration fee. You may |
| companies offer a card specifically aimed at | | | | also be charged a considerable sum for even |
| people with poor or no credit history, and | | | | applying for the card, so shop around and |
| market them as a 'first' or 'starter' card. | | | | check the small print carefully before |
| The idea is to offer a card with a low credit | | | | signing up. |
| limit and a comparatively high interest rate, | | | | |
| as a way of allowing people to being to | | | | To sum up, no one would deny that a bad |
| develop some positive history on their files. | | | | credit rating makes it harder to get a credit |
| | | | card or other plastic payment solution, but |
| While these cards are poor value in | | | | with a little searching, there are cards of |
| comparison to more mainstream offers, the | | | | some kind available for nearly everyone. |
| acceptance rate is very high and by opening | | | | |