Credit Card Debt Down Further–But What About Those Already in Trouble?
Credit Card Debt Less Troubling
Regular readers of this column already know that, according to its consumer credit figures published April 7, the Federal Reserve says that credit card debt is declining fast. In fact, it dropped in February by an annualized rate of more than 13 percent.
Yet more encouraging data was released Friday by Fitch Ratings. These showed that “charge offs” (what credit card companies call write offs) dropped a little in March to 10.93 percent. Meanwhile, the number of payments that were either 30 or 60 days late also declined.
Secured Credit Cards for Rebuilding Credit Scores?
Sadly, these improvements come too late for millions of Americans who’ve found that their credit scores have been badly damaged by the economic downturn. They now face an uphill struggle as they seek to re-establish their creditworthiness.
One potentially powerful tool that can help in the rebuilding of those battered credit scores is the use of secured credit cards. But its important to make sure that you only sign up for one of these with your eyes wide open.
Shop Around the Secured Credit Cards Market
The first question to ask yourself–“Do I need a secured credit card?” If your credit score is over 500 then you still stand a reasonable chance of getting a traditional card, and, in most circumstances, you’re likely to be better off with one of those. After all, you need a cash deposit to secure the card.
Another key point is to check out all the different fees for which you could be liable. Some credit card companies are pretty good at gouging their customers (no kidding!), and see these products as cash cows. You’re unlikely to get as good a deal as someone with better credit, but that’s no reason to allow yourself to be ripped off. Shop around, and you should find a card with reasonable fees and a sensible interest rate.
The deal-breaker question to ask concerns credit reporting. The whole point of these cards is to show that you’re again capable of making prompt, regular payments. If the card issuer you’re thinking of applying to doesn’t report your activity to all three credit reference agencies (Equifax, Experian, and TransUnion) then find one that does.
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