Credit News

Comparing Credit Cards Is Vital With Poor Credit

by Staff Writer, Credit Karma

March 14, 2009 | 0 comments

If you have poor credit, your credit and financing options are often limited. As a result, most people with poor credit are resigned to accepting whatever credit they receive from payday loans to secured credit cards. However if you spend a little time comparing sub-prime products such as a secured credit card, you can save hundreds of dollars in processing fees, account fees, and interest.

Below are the features and costs of two credit cards in the market, one is the Orchard Bank Classic MasterCard and the other is the Continental Finance Classic MasterCard. Both are marketed to subprime users looking to rebuild credit.

	Orchard Bank Classic MasterCard	Continental Finance Classic MasterCard
Credit Target	Sub-Prime	Sub-Prime
Application Fee	None	$200
Annual Fee	$35 Waived First Year	$50
Account Maintenance Fee	None	$15 Monthly ($180 per year)
Credit Limit Increase Fee	None	$25
APR	7.90%	19.92%
Min Security Deposit	$200	None

With the Orchard Bank credit card, you will need to send in at least $200 to obtain a credit limit equal to your deposit. Your deposit will accrue interest in a saving account and will be returned to you upon closure of the secured card provided you have paid your balances. The Continental Finance credit card requires you to pay $200 in processing fees, $50 in annual fees, and $15 in monthly service fees. That is $265 in fees before you even received your card. With the Orchard Bank card, your security deposit is refunded whereas with the Continental card the fees are lost. The Orchard Bank credit limit is equal to your deposit and the Continental Finance credit limit is $300.

When you compare the annual fees, Orchard charges $35 a year and they waive this fee in year one whereas Continental Finance charges a $50 annual fee plus $180 in maintenance fees. That is a whopping $230 in fees annually for a credit card with a $300 limit. When you do the math, Continental Finance $430 year one for a card with a $300 limit whereas Orchard Bank charges approximately $200 that they return when you close the account in good standing. This is a perfect example of how two products targeted to the same people can vary drastically in cost.

The bottom line is that just because you have bad credit, it doesn't mean you should have to pay exorbitant fees. Be informed and make sure you compare products before you make your next financial purchase. We have a list of recommended credit cards based member feedback if you need a starting point.

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USER COMMENTS(15)

sgrossok
Jul 26
9:40 pm

my score is 537 can a get a credit card that is not a "secured"-prepaid card. or should i try and get a almost paid off account back open?

CK Moderator

At that credit score it is unlikely that you would be approved for a non-secured credit card. Your local bank or credit union could be worth a shot.

chocchoc
Jul 22
10:04 am

if my credit score is 491 could i get one of those cards?

CK Moderator

Cards like the Public Savings Bank Secured Card are great for poor credit. They key is that they don't have a credit score requirement. Just keep in mind that it will require $379 from you to start. But the card should help re-establish your credit history provided you use the card responsibly.

Zeuss
Jul 17
10:40 am

I agree with the comment from tom jefferson. How should be illegal that companies like utilities don't report to credit bureaus until you don't pay them. Yet you get no credit for all the times you paid or length of service you did pay. They provide services based on your credit; most times charging you a deposit. Someone has to do something about this; it's not fair nor does it make sense to me!

Really, I think someone needs to re-think the credit scoring system; it's your lifetime report card. Even with hard work, your efforts go unnoticed; it's all based on if you have money and whether you pay on-time; if you don't have money, who determines that? It's like you pay twice for the face you are not working! When you loose your job, you have to deal with that and most times, don't have money to pay your credit cards - - With the economy and all, no one has a true handle on how or when they receive money. Most of us work pay-day to pay-pay praying to keep our jobs.

autumnleaves
Jul 13
12:04 pm

Does the my rent and my electric bill go towards my credit score?

I pay both my rent and electric bill faithfully but it seems like my credit score is not getting better, can you tell me why this is?

CK Moderator

Generally utilities do not affect your credit score as they are not reported on your credit report. A company called PRBC is trying to build a credit score from these types of payments but it is not used by many of the main financial institutions.

godwinsg
Jun 11
12:00 pm

I read that paying off your card every month does not help to improve your FICO score. The advice suggested paying your card down to 30% without going to zero. The effect is called "credit utilization". Moderator, can you please comment?

CK Moderator

This is a question that requires a more lengthy answer. We will post something on Q&A in a few days.

jjones15
Jun 10
10:39 am

Also, I'm glad to see that CreditKarma does not have those Bad "Bad Credit" cards on their site anymore. Kudos

jjones15
Jun 10
10:38 am

Orchard Bank has been good to me. Had their secured card with $200 limit. After about 2 years, they sent me a letter increasing my limit to 300 and making it unsecured. After the first year of having their card, their parent company hsbc sent me an approval letter for their card with a $300 limit and it was a free pass to the football hall of fame(because I go there often? LOL never used it) Yea, there's a $35 annual fee on my orchard bank and a $49 one on my HSBC, but now I've had them both for about a year and capital one also gave me a card now with a $1000 limit. I'm tempted to close out with HSBC but don't want to ruin the age of my accounts.

My cards have no fee for CLI. Also, the customer service on the Orchard Bank number is horrible. BUT, if you call the HSBC number they can service your orchard bank card and seem to me to be much better. Don't ever expect to recieve a CLI increase from either from what I've read but Orchard Bank makes so much more sense than any of those fee cards.

First Premier sends me an approval every month and I check just to see. Every month it's a $300 limit with 50 available at first. I can't believe people fall for companies like First Premier, Tribute, Continental or any of the others. They can't possible help build credit if your balance is that high to begin with.

Monique25
May 19
4:22 pm

Orchard is good. I applied for it today and you can also go to their website for it as well.

37cam
May 14
8:29 am

very helpful. Do you have a link for the orchard card where i can read the fine print?

thank you

CK Moderator

From what we understand, they took their card offline. That is why it is off our site as well. We are told it will be back in a few more weeks.

tomjefferson
Apr 10
12:53 pm

What I don't understand is why "other" forms of payments each month are not taken into account on ones credit score. For myself, I more than likely would not qualify for a mortgage so I am forced to rent. Over the past 3 years I have paid $1,300 per month on-time in the two different rentals (moved once a year) and my previous Landlords have all given me excellent recommendations.

Also, if electric, cable, other utilities, cell phone companies, auto insurance and any other business that looks at your credit score to make a determination of the amount of deposit they require or if they will charge you more per month due to a lower credit score than they would like, I believe they should also report to the credit agencies when you make your monthly bill payments on-time.

It's unfair these companies/city utilities will base how they treat you using your credit score but don't give you "credit" for making their bill payments on-time. This would help me TREMENDOUSLY with my credit score -- especially just my rent being reported!