High Interest Credit Cards to Avoid
High interest credit cards should usually be avoided for long term borrowing. They can be useful in a short term capacity but avoiding the lenders of high interest credit cards and loans will be the better option.
High Interest Credit Cards and Long Term DebtThe major problem with high interest credit cards is the amount of interest that can be applied. Most banks and credit companies apply annual percentage rates (APR) of between 12% and 20%. Customers with good credit records can sometimes find credit card deals with an 8% APR or even lower. But it is not uncommon to find high interest credit cards with annual percentage rates of 40% and higher. These credit cards will usually end up in the hands of customers who can least afford them but have no choice due to poor credit records.
The Government and High Interest Credit CardsAlthough credit card companies have been told to apply responsible lending methods the high interest cards are perfectly legal. There have been many calls from debt help agencies to apply stricter control over high interest lending. But the government and the credit industry claim there is a need for this type of credit. Consumers with bad credit records are left with little choice but to take the high interest deals on offer. It is always advisable for consumers to wait until credit records have been repaired to avoid high interest rates.
Spotting the High Interest Credit LendersIt is not too hard to spot and avoid the high interest credit card lenders. Advertisements will usually make statements such as no credit record checks. No credit checks means that even those with poor to bad credit records can receive credit. The price the customers will pay for no credit checks will be high interest rates and even higher late and missed repayment fees. Annual percentage rates should also be displayed on the advertisements. Anyone who is considering a high interest credit card or loan should never use security such as property to guarantee repayments.
Where High Interest Lenders AdvertiseHigh interest lenders will usually advertise in newspapers, television and on the internet. Daytime television adverts for high interest loans and credit cards are used to target the unemployed. Television advertisements must display the annual percentage rates. There are actually some high interest lenders who advertise on daytime television with a staggering APR of 2000%. These loans should never be used for long term borrowing.
Quick Checks for High Interest LendersAnyone looking for reasonable APR on credit cards and loans should always avoid high interest lenders. Spotting these lenders isn’t too hard and quick checks will include:
- Claims of easy credit terms with long repayment options
- Very quick approval claims
- High street lenders will sometimes offer other financial options including converting goods into cash
- Claims of ‘no credit checks’ and claims that they will guarantee loans and credit cards
- Brightly coloured window advertisements designed to make the lenders seem friendly to the customer
- The annual percentage rate; one look at the APR should be the only clue needed
- Other financial solutions available such as payday loans and high interest household goods for sale
- Claims of household visits to pick up repayments
When To Use High Interest Credit CardsIronically, a high interest credit card or loan can be the way to rebuild a bad credit record. Consumers can take a high interest credit card, spend very little amounts and repay within the interest free period. This will help to repair a credit record and the good record of repayments will show on credit references. Alternatives ways to rebuild a credit record can be taking out a mobile phone contract and repaying on time without fail. Repaying on time every month is the key to rebuilding a bad credit record.
High interest lenders who supply credit cards and loans will seem very amicable at first. But it only takes a few missed payments for massive fees and penalties to be applied. Debt collectors will soon be called in if these charges are not met. High interest lenders do have a range of financial solutions available but all will come with high interest fees. Consumers should avoid this type of lender if they wish to avoid falling into debt traps that are speciality with high interest lenders.