Getting Credit Cards After Bankruptcy: A Complex Dilemma Made Simple

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Recent crisis forced many consumers to file bankruptcy, as they found themselves unable to cope with increasing credit obligations due to unemployment or significant loss of income. While bankruptcy is a difficult and a stressful process to go through for anybody, it does allow for a fresh start once the old debts have been removed or restructured by a court order. Many consumers want to use a clean slate and to rebuild their credit history, however, most fear credit card debt and seriously doubt the feasibility of getting and using credit cards ever again.Credit Cards Are Great If Used RightAccording to many sources, it is intolerable level of unsecured debt, i.e. high credit card balances that cause most consumers to file bankruptcy. Before crisis, when the economy was on the rise, credit card companies were increasing credit limits and consumers enjoyed higher spending without thinking about consequences. Recession put an end to confident shopping and living beyond the means, as banks were forced to cut the limits and raise the charges, forcing many consumers to go bankrupt, unable to service increased debt. However, with proper planning and responsible consumer behavior, credit cards are a great tool that may be utilized to finance certain life activities and to provide financial backup for emergencies.Credit Cards Help To Build CreditCredit cards, if used improperly, may make you bankrupt, yet they are the most effective tool to build a healthy credit history. While it may seem awkward, it is true. A healthy utilization of revolving credit shows potential lenders that you are a trustworthy and a responsible individual. In addition, revolving credit accounts to nearly third of your credit score composition. Therefore, credit cards are a necessary evil for consumers in modern society. Instead of fearing credit cards, you should fear your impulsive spending, and plan your financial life; then, you do not have to worry about raising balances and costly interest charges.Post-bankruptcy Credit Card OptionsOnce the need for credit cards in rebuilding credit is established, there arises a problem of getting one. Most lenders would stay away from your requests for unsecured loans and credit cards, knowing that you have declared bankruptcy recently. Some companies would grant you credit at skyrocket rates and interest, often costing you hundreds of dollars per year without even using your card. Stay away from those as far as you can, as they would simply rip you off, empty your wallet, and create more damage to your credit. So, is there a solution?Yes, there is! Secured credit cards, offered by many trustworthy banks are an excellent solution to rebuild your credit after bankruptcy. The way they work is that you open two accounts with a bank: a savings account that serves as collateral, where you deposit a certain sum of money, and a credit card account with a credit limit equaling to your savings deposit. Banks have no problems issuing such cards to consumers even with worst credit possible, as they have security in form of the money placed into savings account. Such credit cards are reported to all major credit reporting agencies and help you to rebuild your credit history and to raise your credit score. It is a win-win situation for you and your bank. A bank gives you a great interest rate, as their risks are insured, and you get a credit card that reports to your credit file and a guarantee that you would not overextend yourself.

Article Tags:
Credit Cards, After Bankruptcy, Many Consumers, Credit History, Credit Card

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ABOUT THE AUTHOR

Melissa Kellett has a Master in Finance and has been a financial consultant for years. She specializes in Poor Credit Personal Loans people and also in helping people to get approved for Personal Loans, unsecured loans, Bad Credit Loans Guaranteed Approval, no credit check loans, student loans among many other financial products. Visit her site at http://www.speedybadcreditloans.com
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