For a selection of guaranteed approval credit cards, use the free online credit card chaser tool and make an informed choice.
Guaranteed approval credit cards come with high annual percentage rates (APRs), high fees and penalties, and low credit limits. Additionally, they are difficult to find when the economy is struggling.
What is a guaranteed approval credit card?
Guaranteed approval credit cards or guaranteed acceptance credit cards have been specially designed to help people with poor or no credit. Given the poor economy and high unemployment, this is a huge market for credit card companies.
Guaranteed approval credit cards can be either secured cards, prepaid cards, or unsecured bad credit-credit cards. With these credit cards, the key factor is to be consistent with your payments so you can build a strong credit history.
Why would you need a guaranteed approval credit card?
The credit card industry created this category to cater to an ever-increasing number of people who are unable to access home and car loans, affordable car insurance and even jobs besides regular credit cards because of poor credit scores.
According to the myFICO web site, poor credit history can be created by various factors. These factors include:
- Not paying minimum balances on your credit card
- Exceeding your credit card limit
- Carrying high debt on your credit card
- Opening and closing too many credit card accounts
- Delinquencies on other loans such as mortgage, auto, or student loans
Besides poor FICO scores, another reason for seeking a guaranteed approval credit card is the lack of credit history because of being a new immigrant or a young adult. In either situation, these specially designed financial products such as secured and unsecured credit cards that may be used to increase or build your credit history.
What is a guaranteed approval secured credit card?
A secured credit card is a common form of guaranteed approval credit card. If you choose a credit card which is secured, the lender will require you to deposit a certain amount of money as a down payment. This security deposit minus associated processing fees is then used to set your credit limit.
According to CNNMoney, most lenders require a minimum deposit of $200 to activate a secured credit card. If you need more credit, you add the money to your account. This security deposit is refundable and these credit cards can be cancelled without any penalties.
Once you have deposited the security amount, you use your secured card like a regular credit card. Each month you will receive a statement of charges, with the minimum amount due and a deadline for payment. Just remember that you must make your payments on time and preferably, in full.
If you make your payments on time and demonstrate financial responsibility, your credit card provider could raise your credit limit without requiring any additional deposits.
Secured credit cards are a great tool for building credit because they report directly to Experian, Equifax, and Trans Union, which are the three bureaus that calculate your credit scores.
What is a guaranteed approval unsecured credit card?
An unsecured credit card is another type of bad credit-credit card. Unlike the secured credit card, this form of guaranteed approval card does not require you to put down a security deposit.
Instead, the lenders protect themselves by charging higher than average fees, penalties and APRs. Unsecured credit cards could have annual fees ranging from $39 and up while their APRs can range from 7.9% to 29.99%.
Is a prepaid card a good guaranteed approval credit card?
A prepaid card is very similar to a secured credit card but there are some significant differences, specifically when it comes to rebuilding your credit.
A prepaid credit card is like a bank debit card. You have to deposit money into your card account and then use your issued prepaid card to shop at any retailer or vendor that accepts debit cards.
Once the money in your account is depleted, you are required to add more in order to continue using your card. However, unlike a secured credit card, a prepaid card does not help you improve your credit score.
Which kind of guaranteed approval credit card is better?
There is no definitive answer for that question. In some cases, you might not have a choice. A very poor credit score or no credit score might automatically disqualify you for most unsecured credit cards or result in outrageous annual fees and APRs.
On the other hand, if your credit history is not abysmal and your income indicates a certain level of financial wherewithal, you might not require any collateral to obtain a guaranteed approval unsecured credit card. Time Moneyland, does issue a note of caution and asks customers to beware of fee harvester credit cards that guarantee approval but do not repair your credit score.
If you are having difficulty understanding the different options available, use the online credit card finder to get the appropriate guaranteed approval credit card.
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