January 31,2007
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The Bad Credit Card Fee Trap
If you have been shopping for a credit card meant to boost poor credit, you may have found yourself angling for a card with the lowest A.P.R. possible, which was likely still sky-high. "Bad credit cards" do tend to charge high interest rates on their high-risk cardholders, both to protect their investment in you, and, well... because they can.
An alternate way for "bad credit card" issuers to make you pay for your credit boost is though a mixture of excessive and exorbitant fees. Ironically, you may find cards fitting this profile among those with the lowest A.P.R. in the category! Sure, you'll save a few interest points a month, but you may find yourself shelling out a significant annual and monthly fee – not to say anything of the one-time fees, of which there may be four or five.
It only makes sense that those with poor credit would have to give up some to be able to obtain a card – that is, after all, one of the things that makes good credit more desirable- and you shouldn't automatically rule out a card with fees. Just be sure that you aren't getting yourself in too deep to start with – account opening fees always go against the balance of the card, which is normally low at the beginning. You may find yourself with a maxed-out card that you haven't personally spent a penny on!