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Comparing Credit Cards Is Vital With Poor Credit

March 14, 2009

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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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Orchard WILL charge a fee for CLI...

beebopjkm 1 year ago

Does anyone know the amount? Happy to update as their CLI fees were not listed.

CK Moderator

what if you've had these particular cards for rebuilding credit and they charge for late fees and such and you just can't get ahead of this creditcard game because they charge 19% or better for lateness also or missed payments and they are harassing people for payment.

sylvianurse 1 year ago

If your goal is to rebuild your credit, you need to avoid late payments. If you don't think you can do that, you should try sticking to pre-paid credit cards. Otherwise you are completely right, it is a downward spiral.

CK Moderator

perhaps the credit bureaus do need to factor in the consumers abilty to save versus pay debt. who sets these rules and why can't they be changed? is it written in stone that saving money shouldn't influence your credit scores. i think that i shall propose that to my congressman, Rep Dennis Moore from the State of Kansas since he has been instumental in passing new legislation in regard to credit reporting. That's what he had written to me.

JohnHoer 5 months ago

Orchard Bank after 2 years of being with them for me anyway, returned my security deposit with interest (also gave me the option to put it towards my account). 6 Months later they lowered the monthly fee to 19 a month and the interest rate, what started off with a 200 dollar secured credit limit with a 70 dollar anual fee is now a 500 unsecured card with a 19 dollar anual fee.

Mike11212 1 year ago

I think it's just plain crap that you have to go into debt and or utilize credit cards just to be able to buy a home or car. Since when is it wrong to pay cash? What benefit is there to getting out of debt? Who designed this ignorant system anyway? You constantly hear get out of debt yada yada but if you do you're penalized. I don't want to pay intrest period. I used to have credit cards but closed them as a conscious decision now I can't get anything decent. It just infuriates me that my life is basically controled by people I can't even call or go talk to. A big huge scam is what I think it is.

livinfree 1 year ago

You don't have to pay interest to have good credit but you do need to have a credit history and open accounts.

Credit is not a bad thing if used responsibly. It can be a great convenience if you manage it correctly.

CK Moderator

I agree with the moderator in that one doesn't have to accrue debt to improve one's credit history. You only have to demonstrate the abiltiy to manage credit. But, I do have a problem with nudging consumers toward secured or unsecured credit cards. Both have significant fees and/or interest rates involved.

In my opinion a good demonstration of financial management is the ability to save money (which I stll need to master). You can always borrow against your savings and build your credit history without getting a credit card and paying those hefty fees and/or interest rates.

If we can't save without a credit card, it won't be any easier to save with one. And if we can't save, why would we expect to be able to pay our debt?

I suppose we all want access to the easy money of a credit line. Down the road there is a significant price to pay for that luxory.

Wouldn't consumers benefit more if an increased emphasis was directed toward saving and less toward credit cards?

JohnHoer 5 months ago

Savings are great and we are big supporters of it. However savings accounts don't have an impact on your credit score. For those looking to finance a home, good credit is still important.

CK Moderator

I agree with you. I don't know why one has to have a network bank card to demonstrate good credit. I applied for this one personal loan and one reason for being denied was tha I didn't have a bank card. But, I did have the following.

A car loan that I paid ahead of schedule with no late payments.

A store charge card that I've had for many, many years with no late payments

Another store charge with a limit of $200o. The maximum I charged on it was $340 and have been making larger payments than necessary and the balance was nearly paid (it is paid now).

I had a personal loan that I paid in full and ahead of schedule.

My 2nd mortgage had a balance of only about $1000 )down from the original $14200). I was 24 years ahead of schedule (its paid now).

None of that seems to account for anything. I know I had some other very serious complications in the past. But, that is well over two years ago with no late payments since.

But, being shot down for not having a bank card. That's just not right.

It is a racket.

JohnHoer 3 days ago

i think this is crap that you have to go in to debit just to get your credit score up and in good standings

justone21 1 year ago

That is a misnomer. You need to use credit to have a good score but you don't need to go into debt. For example, using credit cards and paying them off in full each month is a perfectly good way to build credit without going into debt.

CK Moderator

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!

tomjefferson 1 year ago

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

thank you

37cam 1 year ago

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.

CK Moderator

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

Monique25 1 year ago

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.

jjones15 1 year ago