Millions of people in the world do not like walking with money. There is a significant risk while walking with cash in your pockets. You might lose them on your way, or meet thieves who then steal from you. Credit cards are generally for people with good credit records. However, people with poor credit records can also get credit cards. You can get a credit card with a 5000 limit with bad credit and enjoy it like others.
The only major shortcoming with bad credit cards is the high interest associated with the credit cards. Although the rates are high, they drop with time as long as you pay your debts on time. Late payments, as well as defaulting debt payments, affect your credit score in a big way. The secret to improving your score is to spend within your means. Spend what you can pay back. It prevents you from entering into an economic strain.
There are several requirements you need to fulfill before getting a credit card. First of all, you should have a checking account. Most credit card companies allow you to open a free online checking account with no opening deposit within a short time as long as you have the necessary documents. Immediately you open the account, the financial institution issuing cards can now decides how much to give you. Your credit score may determine how much to get.
How Can You Use A Credit Card?
A credit card allows you to borrow money from your bank for your expenses. For instance, you can use credit cards to buy goods and services. Supermarkets, some retail shops, fueling stations, health centers, among many others, allow you to use a credit card to go shopping.
Moreover, you can use a credit card to send money from a checking account instantly to your loved ones or any other relevant recipient. It is possible, especially if you have an online checking account. You can also send money from your credit card to your debit card or prepaid card.
How Long Does It Take To Acquire A Credit Card For Someone with A Bad Credit?
Most financial institutions offering credit cards for bad credits do not take long to approve your application. You can get instant credit card approval for bad credit no deposit from various institutions. Others can take some time to give you feedback but not more than three days.
You might wonder why the credit companies are fast to give you credit cards, more so if you have bad credit. You should understand that they are doing business. The amount of fees you pay, ranging from annual fees, monthly fees, transaction fees, interest fees, and so on, goes back to them as a profit.
Again, credit companies mainly need your credit score if you are applying for an unsecured credit card. Secured credit cards do not bother about your credit score since you have to deposit collateral. The credit limit you get is equal to the amount of money you deposit in your account.
What Is The Difference Between Secured And Unsecured Credit Cards?
Although the two cards look alike, there are some differences between them. First of all, a secured credit card requires you to deposit a certain amount or higher. The amount of money you deposit in your account acts as security to the money you use.
Remember that for a secured credit card, you do not use more than what is in your account. The limit is what you deposit. After some time, the card issuer may review your account and give you back the deposit for use on your transactions. That is possible only if you show good repayment behavior. Interest rates are usually low.
On the other hand, an unsecured credit card does not need you to pay a deposit. You can open a bank account with no deposit required and start enjoying credit card services. However, here, your credit score is a determinant of how much credit limit you will get. For a start, you will get low limits, but your good payment practices can help you get higher limits. With unsecured credit cards, the interest rates are high.
How Are Credit Cards Different from Debit Cards?
Credit cards and debit cards look-alike in physical appearance as they are all plastic in nature and of the same size. Most financial companies that issue credit cards are the same companies that issue debit cards. Both debit cards and credit cards require you to open a bank account. There are numerous banks with free checking accounts with no deposit that can help you to open one.
The difference between a debit card and a credit card comes on the way you can use the cards. In the case of a debit card, you can only use what is in your account. If you exhaust your account money, then you have to deposit more money to continue enjoying the card services.
For credit cards, you borrow money from your bank to pay later. Usually, your credit company gives you a credit line per month, depending on your ability to pay back. If you exhaust the limit, then you have to wait until the next round.
Remember that credit card usage attracts interest rates since you are using borrowed money. A debit card does not charge you interest. However, you have to incur transaction charges, which also apply to credit cards. Credit cards make you suffer a lot of fees. The good thing about credit cards is that you get a chance to build your credit score so that you can borrow loans for developments.
Secured credit cards almost resemble debit cards in that you can only spend money equal or below your collateral but not more than that. Secured credit cards aim to help you to raise your credit score. Secured credit card accounts are almost similar to second chance checking with no opening deposit in that; they aim at helping you to regain trust with your bank.
What Should You Do To Avoid Bad Credit?
Bad credit is a big nuisance to your financial stability. Most people find themselves with low credit not because they want that, but because they met economic challenges that drove them into acquiring poor credit records.
However, there are various things you should do to avoid bad credit scenarios. First of all, you need to pay your loans on time. Late payments of loans affect your credit score significantly. They account for about 35% of the FICO score. Again, a late payment can stay in your record for seven years.
Secondly, you have to identify which bills report to the credit agencies. If you have financial difficulties, then you have to check on bills such as credit cards, car loans, mortgage loans, among others, that are likely to forward your details to credit bureaus and pay them first.
Moreover, do not take too much debt. You may reach a point where you are unable to repay your bills, thus subjecting yourself to problems. You should always consider borrowing from your friends and relatives. If you use credit cards, spend as low as possible; below your credit line. Again, avoid applying for too many credit cards. Remember that each credit card inquiry contributes to 10% of your score.
Another good way to avoid bad credit is by doing some savings. If you encounter financial challenges, then you can use your savings to sort out your needs. By doing that, you will avoid borrowing money from your bank.
Which Are The 9 Best Credit Cards with $5000 Limit with Bad Credit?
The most common credit cards with a $5000 limit for bad credit include the following.
1. Green Dot Primor Secured Visa Classic Card
The credit card requires you to pay a security deposit of between $200-$5000. Moreover, you have to pay a $39 annual fee. Again, you get a low 13.99% Fixed Purchase APR. The card issuer does not require a minimum credit score since you have to deposit collateral.
Again, you only borrow against what you deposit. It does not trigger a credit pull. The card is a secured one to be precise. Learn more about Green Dot Primor Secured Visa Classic Card here.
2. U.S. Bank Secured Visa Card
U.S. Bank Secured Visa Card requires you to pay at least $300 to secure a credit card. However, you can deposit up to $5000 and get a credit card limit of equal measure. The deposit earns you interest in the secured deposit account. Your account must remain active as well.
Again, U.S. Bank Secured Visa Card requires you to pay an annual fee of $29. The amount is pocket-friendly bearing in mind that you pay it once per year. Learn more about U.S. Bank Secured Visa Cards here.
3. Green Dot primor Mastercard Classic Secured Credit Card
Green Dot primor Mastercard Classic Secured Credit Card allows you to deposit about $500- $5000. There is no credit score required while applying. The maximum amount you can borrow should be equal to the amount you have deposited. Moreover, no application fee is required.
All credit types are eligible with Green Dot primor Mastercard Classic Secured Credit Card, and thus the company gives you an excellent opportunity to raise your score. The company has a low fixed APR of 13.99%. There is an annual fee of $39. To learn more about Green Dot primor Mastercard Classic Secured Credit Card click here.
4. Applied Bank Gold Match Plus Visa Card
Applied Bank Gold Match Plus Visa Card allows you to deposit at least $300 and $5000 at most. Your credit limit is the amount you deposit, plus $300. Your deposit does not earn any interest. However, any amount you deposit receives insurance by FDIC.
The Applied Bank Gold Match Plus Visa Card has an APR of 23.99%. The APR is a bit low as compared to most banks. Learn more about the Applied Bank Gold Match Plus Visa Card here.
5. Green Dot primor Visa Gold Secured Credit Card
Green Dot primor Visa Gold Secured Credit Card allows you to make a maximum of $5000 and borrow an equal amount. The lowest amount you can deposit is $200. During application, there is no need for a credit record. Moreover, you do not pay any application fee.
In addition, the interest rate on this card is 9.99% fixed on any amount you borrow. The application takes around 8 minutes. Interestingly, the company reports to the three credit bureaus, thus making you increase your credit score. Learn more about Green Dot primor Visa Gold Secured Credit Card here.
Other credit cards have higher credit limits.
The fact that they have over $5,000 credit limits makes them more advantageous since you can borrow as much as you want within the limits. They include the following.
6. Wells Fargo Business Secured Credit Card
Wells Fargo Business Secured Credit Card is among the unique cards due to the large credit limit successful applicants get. You can get a credit limit of up to $25000. That is possible if you deposit a similar amount to act as your collateral. Moreover, you can only make a minimum deposit of $500.
With Wells Fargo Business Secured Credit Card, you will be able to earn a 15% cashback on any purchase you make with your card. You can redeem the points with a cheque or as a statement credit.
As a cash holder, you can receive up to 10 free employee cards. Again, you have to pay an annual fee of $25. Learn more about Wells Fargo Business Secured Credit here.
7. MidFirst Bank Business Secured Credit Card
MidFirst Bank Business Secured Credit Card requires you to make at least a deposit of $1000. However, you can deposit up to $50,000 and borrow against the collateral. It means that you can borrow credit of up to $50,000. Remember that the deposit is refundable after some time.
The annual fee is $35. Despite giving higher credit limits, MidFirst Bank Business Secured Credit Card is available to Texas, Oklahoma, Colorado, and Arizona residents. You have to go personally to any of their branches to apply. To learn more about MidFirst Bank Business Secured Credit Cards, click here.
8. Petal Visa Credit Card
Petal Visa Credit Card gives you a credit limit of between $500-$10,000. Approval is instant, and you will not pay any sort of fees in the application process. Moreover, upon opening the account, the issuer gives you a 1% cashback on any purchase you make. After making 12 on-time payments, the card issuer raises your cashback to 1.5% on any purchase you make.
Petal Visa Credit Card does not require a credit history from you. If you have bad credit, the card allows improving your credit score. Learn more about Petal Visa Credit Cards here.
9. Fidelity Rewards Visa Signature Card
Fidelity Rewards Visa Signature Card gives you a minimum credit limit of $5000. You will not pay any annual fee once you register with the company. Moreover, enjoy a 2% cashback on all eligible purchases you make.
If you are willing to improve your credit score, then Fidelity Rewards Visa Signature Card will be an excellent fit for you. The only disadvantage is the big deposit you have to make. To learn more about Fidelity Rewards Visa Signature Card, click here.
Credit cards for individuals with bad credits are significant as they help the users in improving their credit records. A poor credit record can deny you a loan when you need it most. The only challenge with credit cards for bad credit scores such as secured credit cards is that you need to make deposits. Unsecured credit cards attract huge interests, among other fees. However, they are worth utilizing so that you can improve your credit score.