Credit cards today are generally issued by a bank or financial company, and this gives the holder the privilege of making purchase, usually at the point-of-sale, and getting short-term financing. Credit cards also charge interest, which are often levied a month after the purchase is made. These financial instruments also have borrowing limits, which are pegged based on the individual’s credit rating. Are they good for people who have poo, or bad credit histories? Let’s find out whether instant approval credit cards are good for these types of people.
For Individuals with Bad Credit
For individual consumers who have poor or bad credit, they can apply for secured instant approval cards, because the collateral provides some form of comfort to credit card companies, with the line of credit being secured by a CD, and the credit limit varying between 50 to 100 percent of the deposit. Having a secured line of credit up to $5,000 would be certainly be good enough, because the client is approved regardless of their credit history or annual income.
The Card Can Help Improve Client’s Credit-Utilization Ratio
Apart from providing the perks of instant approval, a secured instant approval credit card also helps consumers improve what’s called a “credit-utilization ratio”. Because the customer’s credit score and credit-utilization ratio are “inversely” related, the card owner needs to maintain a low credit utilization ratio (which is possible as long as the credit limit increases while the outstanding balance remains nearly constant). And because secured credit cards have a higher APR compared to unsecured credit cards, users can expect instant approval cards to carry a higher interest rate. And after the signing of the Credit Cardholder’s Bill of Rights in May 2009, credit card interest rates have significantly risen, and credit limits have been reduced, while annual fees have significantly risen.
For Business Owners With Bad Credit
For business owners who have poor or bad credit histories, instant approval credit cards can truly be helpful. However, business owners need to remember that they may get a response from the card company within twenty-four hours, instead of just one or two minutes. For these types of clients, a credit limit of up to $100,000 is usually made available, and this is often secured by a FDIC-insured business savings account deposit. An instant approval credit card can also help small businessmen rebuild damaged credit, because the entrepreneur is given access to a line of credit that’s not tied up to their personal credit card.
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