Many people ask if it’s possible to sign up for credit cards after bankruptcy. Re-establishing credit, and signing up for credit cards after bankruptcy is possible. You may however, be limited at first to certain types of cards such as secured credit cards.
If you’re looking for information on the types of credit cards, fees, and strategies to rebuild credit, use the credit card chaser now.
During bankruptcy, the debtor turns over a personal balance sheet of assets and liabilities to the bankruptcy court. The court then distributes available assets to lien holders of secured loans, such as auto loans, or unsecured loans, like many credit cards. Bankruptcy helps the debtor to get a fresh financial start.
Why is signing up for a credit card important after bankruptcy?
Having a credit card helps to manage daily life. Simple decisions like renting a car on vacation may be impossible without one. Presenting a debit card to a car rental agent may subject the cardholder to an instant credit check. If the debit cardholder’s credit score is low, the car rental company may refuse to rent the car, even with sufficient funds available on the debit card.
Using a debit card for online purchases doesn’t provide the same level of protection as a credit card, either. Unlike a credit card secured by a cash deposit, debit cardholders are usually subject to a $50 minimum charge when the card is stolen and the cardholder quickly reports its misuse. For these reasons and others, having a credit card is a financial essential to many consumers.
Should I sign up for secured credit cards after bankruptcy?
According to the Federal Reserve Board of the United States, consumer credit card information site, a secured credit card enables consumers to obtain needed credit access. The consumer applies for a credit card and provides security to the issuer by depositing security funds.
Some secured card issuers require the establishment of a savings account by the cardholder. Other cards, considered partially secured by the credit card issuer, require:
- Higher annual card membership fees
- Application fees
- Set-up fees
- Account establishment fees
Partially secured credit cards cost the consumer more than a traditional unsecured credit card. The annual interest rate (APR), late fees, or over-limit fees will probably cost more, too. For individuals seeking to re-establish credit after bankruptcy, using this variety of credit card can help to demonstrate responsible financial behavior. The secured or partially secured credit card issuer reports the consumer’s paid-as-agreed use of the credit card each month. As the consumer’s credit score climbs, he can apply for other credit cards.
Security provided to the lender doesn’t offset items like late payments or other charges. The consumer must provide card issuer security in the event of default against payments as agreed. The security deposit isn’t like a check overdraft account. The security deposit remains in the issuer’s hands until when and if the cardholder in good standing closes the account in writing. In some cases, the issuer may return part of the cardholder’s deposit as he demonstrates responsible use of the credit card over a certain period.
Is it possible to get a higher spending limit on a credit card after bankruptcy?
Establishing a higher limit on a secured or partially secured card usually requires the cardholder to provide additional security to the card issuer. A credit limit increase fee may be requested by the issuer, in addition to a higher security deposit according to the Federal Reserve. Make sure to read the terms and conditions on any increased spending limit offered by the credit card issuer.
Is it possible for me to avoid credit card traps after bankruptcy?
The Federal Trade Commission offers advice for consumers seeking credit cards after bankruptcy. Consumers may believe a credit card issuer is charging too much for credit, taking liberal advantage of fees, such as over-limit charges, and the Federal Trade Commission stands by to help.
The CARD (Credit Card Accountability, Responsibility, and Disclosure) Act of 2011 is legislation passed which protects consumers. The CARD Act seeks to make the fees charged by credit card companies more transparent to consumers.
Although a bankruptcy may remain on the consumer’s credit report for up to 10 years, responsible use of consumer credit instruments like secured credit cards can help the consumer rent a home or get a new job. Good credit is beneficial to an individual’s future after bankruptcy.
Go to the free credit card finder now for a fast and free way to request information about how to sign up for credit cards that can help to rebuild a positive financial future!
- Are there any partially secured credit cards?
- First PREMIER Bank Secured Credit Card
- Centennial Secured Credit Card
- Community First Credit Union Shared Secured Visa Credit Card
- Fort Worth Community Credit Union Share Secured Classic MasterCard Credit Card
- Hawaii State Federal Credit Union Platinum Share Secured Credit Card
- Amegy Bank of Texas Visa Secured Credit Card