What Is A Credit Rebuilding Card? | Personal Finance Views

Thursday, April 18, 2013

What Is A Credit Rebuilding Card?

A person cannot easily get by without using a credit card. Cash is great, but you cannot reserve an airline ticket or hotel room over the phone or the internet with cash. You could use a bank debit card, but you cannot use it to hold something temporarily without the entire charge appearing on your bank statement. Some people don’t have enough credit or poor credit to qualify for a traditional credit card. 

Therefore, a credit building card could help in these situations.

Credit building cards are exactly as the name suggests, they are cards for building up your credit. These companies will report your credit activity to the three major credit reporting bureaus. Therefore, if you are making your payments on time and are not charging over your limit, your good credit history will get reported and your credit will begin to improve.

Credit Rebuilding Card

Credit building cards are different from the traditional credit cards in many ways. They are different because they offer credit to people that have poor credit scores. Consider some of the following things with a credit building card:


Credit building cards will charge annual fees, startup fees, monthly maintenance fees and more. The annual fees and start up fees will vary from card to card, but it’s possible that a person that is awarded a credit card with a $300 limit, will start with a balance of $75 or more because of the startup fees and annual fees. Many of these credit cards will also charge a monthly maintenance fee of $5-$10 dollars for every month you have a balance. Although these fees may seem a little unfair, remember that these credit cards are for people looking to rebuild their credit, and it’s sometimes not cheap.

Low Credit Limits

Credit building cards usually offer low credit limits at first, and some cards will not raise their credit limits by much. Some credit cards will raise their credit limits after you have shown a good payment history for a period of six months to one year.

No Cash Back, Points or Miles

Credit building cards don’t usually offer cash back incentives, reward points or airline miles. These are reserved for normal credit cards for people with better credit.

Pre-paid Credit Cards

There are alternative credit cards for those people that have very poor credit and don’t qualify for a traditional credit rebuilding card. A pre-paid credit card requires you to put down a cash deposit, which will usually be your credit limit. Charges and payments are made and interest is charged as if it was a normal credit card. At the end of one year, or the agreed upon time period, you will receive your deposit back and your card is now used as a normal credit card.

Credit building cards are a great way to get your credit score raised to where you could qualify for a traditional credit card. But, you will have to make sacrifices and pay more fees to do this.

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