Sometimes I will rant. This is one of those times. I do not like credit cards. I use them strategically. It’s a game I enjoy. I also like having a high credit score to qualify for a good mortgage rate when we take the plunge and buy a home to live in or another investment property (my wife and I each own property, but rent where we live.) And responsible use of credit helps in that regard. But:
I frequently search online for credit card offers. I’m not exactly sure why I do because I almost always end up annoyed. I guess I like to see what’s out there.
Earlier this week I stumbled upon an advertisement for a credit card that said:
- Bad credit? Apply for a credit card today
- Join nearly 3 million credit cardholders
- Save time with our easy credit card application
- Don’t be held back by past credit card struggles
- This is a credit card, not a debit card or prepaid card
It then had a link to click for “application, terms, and details.” Out of morbid curiosity I clicked. It was a pop-up to a website asking for personal information. At the top of the page were three links – one for “Fees, rates, costs, limitations, available credit and other terms.” I clicked. Another pop-up.
I have copied and pasted part of what was on that page. Yes, you’re reading that correct. The APR for purchases is 59.9%! And to add insult to injury, there is a $75 annual fee and $45 “Processing Fee.” OUCH!! Take a look for yourself:
This is crazy! Assuming you’re approved to a $300 limit, your initial available credit of “about $225.00″ is a significant drop. It looks like you “charge” your annual fee (because I believe you must pay the processing fee up front) on your card, so unless you pay it off right away you’re paying 59.9% interest on that.
Please, please PLEASE do not let yourself get in trouble by agreeing to a deal like this. Paying $45 to apply, $75 a year to have a card and a 59.9% interest rate on top of it all is not a smart way to go about cleaning up your credit. And I do not believe that something like this is the “only” way to repair your credit. It is not. In fact, it’s probably more likely to further damage your credit. Try this instead:
Work on what’s already on your report. Take that $115 in fees and pay off the phone bill that’s been in collections for three years. Or, go down to a credit union or local bank and see if they’ll give you a secured credit card to use responsibly – with no fees – and turn it to an unsecured account after a year of responsible use!
Get a second (or third) job doing anything legal (like delivering pizza, babysitting, mowing lawns) and attack the open items on your credit report. Or speak with local fee-only financial planner and ask what he or she recommends for your situation. But please don’t get a card with fees and interest like this. You’ll be playing with fire!
By the way, here is an article about a similar offer. Can you believe it?!?!
And until next time, put your credit card down (especially if it is one charging 59.9% interest) and slowly step away from the mall!