In debt and tempted by a credit card for bad

In debt and tempted by a credit card for bad credit offer? Here's why it's a bad financial move

We're all painfully aware of the condition of the economy. News stories relating worries over a pending 'collapse' of economies on a global scale and unemployment rates not seen in decades have everyone worried over how much worse things can get. At the same time, most of us have accumulated credit card debt that makes it tough to even make the minimum monthly payments. Should you become laid off, or lose your job, what then? This makes you vulnerable to the credit card for bad credit offers waiting in the wings.

In better times, credit card companies would send unsolicited credit card offers, with enticements of such perks as 'no annual fee', '0% interest for 12 months' and 'no fee for transferring balances from higher APR credit cards'. These offers resulted in a lot of borrowers switching to these typically large banking institutions. What a deal. These types of credit card offers can work for some people, with a stable and significant income. However, for the majority of us, this type of offer usually spells trouble in the future and is simply a dressed-up version of the credit card for bad credit offers. Why?

Most people don't thoroughly read the fine print brochure, which is where you'll find the many caveats and conditions of taking them up on this rosy offer. Should you miss a payment, or be late, the bank may then impose an annual fee, which appears on your next statement, in addition to a substantial late fee and a higher credit card APR.

You may not be aware of the many 'whistle blowers' who have testified that banks have delayed processing of payments received by mail, on time, such that the payment is processed a day or two later, resulting in a 'late' payment, earning you a late fee, an increased credit card interest rate and forfeiture of the terms of the initial agreement. If you transferred the majority of your credit card debt to this single credit card company, your minimum monthly payment quickly becomes unmanageable. Your debt is tied up with a single institution, with almost no hope of negotiating.

That's when you start receiving the credit card for bad credit offers in the mail. Such offers always carry an annual fee and a high interest rate. Depending on your credit report and amount of debt, the credit card company may also require a 'security deposit' of as much as $300. Although not usually stated, even in the fine print of these credit card for bad credit offers, the amount of credit extended may not exceed the amount of the security deposit. If it does, it won't be by much, perhaps just $50-100. Meanwhile, the credit card company retains your security deposit, earning interest of this asset for themselves. It's easy to see that you would have been better off putting the security deposit in an interest bearing savings account.

In fact, you'd be much better off to use one of the consumer debt consolidation organizations, who have the connections and clout to negotiate with all of your creditors for a reduced APR and sometimes, waiving of late fees. The credit counselors work out a program whereby you can eliminate your debt, rather than add to it.

Should you find yourself in an untenable financial position, don't fall into the trap of those offers for a credit card for bad credit!

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