Credit Cards with Bad Credit: Paying Off Debts At a Fraction the Cost

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Generally, people want to avoid bankruptcy, but in certain situations it is a practical solution to getting rid of crippling debts. Paying off debts is a huge drain when income is only just meeting the required repayments, and as time goes on the pressure only builds. And, when it comes to getting credit cards with bad credit, it can actually be of benefit.It seems strange that bankruptcy can improve the chances of getting a new credit card. But this is actually true. In fact, getting approval despite bankruptcy is no longer strange in any financial area. The benefits for applicants are that the ability to get back onto their credit feet is there.And while it is also true that low interest credit cards may not be available for quite some time, it is only a matter of time combined with some good credit practices, that will see normal terms return.Why Bankruptcy Is No Big ProblemYears ago, being declared bankrupt would bring with it a certain stigma, but the growth in such ruling over recent decades means that few people have not been affected by it. So, applications for credit cards with bad credit from people who have been declared bankrupt at some time in the past, are very common.This means that the credit card companies are unable to avoid bad credit applicants. And, rather than close their doors to such a large number of people, they have only set some restrictive terms. This is how approval despite bankruptcy is possible.However, it is worth noting that bankruptcy is now seen as a practical route towards reducing debts, with negotiations usually seeing debts owed reduced to a percentage of the total – maybe 65 cents in the dollar, or even lower. Low interest credit cards are still out of reach though.Approval – But With Bad TermsNegotiations typically result in the total debt wiped out for a fraction of the costs. This is actually the grounds on which an application for a credit card with bad credit can be approved. Since bad credit reflects a difficulty in making repayments, having no other debts to speak of means that only the new card is a debt to considered. Therefore, an applicant is actually in a stronger position.  Lenders will look at the bankruptcy ruling, of course, and know that there should be some extra fees and increased interest rates charged to try to recoup on the risk. However, with the absence of any other debts, the monthly income of the applicants can easily cover the card bill making approval despite bankruptcy likely.The poor terms include interest rates charged as high as 25% on balances, the loss of introductory incentives, like the 0% APR rate. Also, annual fees can be higher for these kind of cards, and the credit limit is likely to be lower and low interest credit cards impossible to get.Clearing Debt One Way or AnotherOf course, in many ways, the chance to clear debt is the main motivation behind bankruptcy. That is why professional debt negotiation services are available, with such huge reductions in the money owed struck quickly. So, when it comes to applying for credit cards with bad credit, the decks are clear.This can be considered a practical solution to managing the debt problem, but there are consequences that need to be accepted. When a credit card limit on an approved card is not more than $1,500, it seems too small, but approval despite bankruptcy is an accomplishment in its own right. It might take 2 or 3 years, but eventually normal terms, like low interest credit cards will be available again.

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ABOUT THE AUTHOR

Donna Hammond is the author of this article. For more information about Bad Credit Motorcycle Loans and RV Loans for Poor Credit please visit her website at http://www.quickbadcreditloans.com/
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