Economy Makes it Easier to Obtain a Credit Card After Bankruptcy
In the past two to three years thousands of consumers have faced financial challenges they did not anticipate and were not able to overcome.
The attitude toward bankruptcy has changed considerably in recent years. For people who carefully managed their finances, paid their bills on time and were proud of their work, the thought of being bankrupt is associated with and shame and disgrace.
The attitude toward bankruptcy no longer carries the social stigma it once had. This legal option offers the chance for a fresh start and a way to walk away from crushing debt.
That debt may be due to overuse of credit cards but more often was cause by a medical emergency or a loss of income due to job loss that continued month after month.
The one concern many facing bankruptcy have is whether they will ever be able to use credit again. What happens when they want to buy a house or need a new car? Will they be turned down if they apply to rent an apartment?
The same credit cards that may have led to filing bankruptcy are what is needed to re-establish good credit. Bankruptcy remains on a credit file for ten years yet you can establish your credit again long before that.
You need to know how to get major credit cards after bankruptcy. Today, it’s likely at least part of the debt load you discharged in bankruptcy court was credit card debt. This is unsecured debt and in a bankruptcy you walk away from that debt owing nothing on those accounts.
Helping Consumer Rebuild Damaged Credit
The increase in foreclosures and bankruptcies in the past few years has resulted in a corresponding increase in trusted lending banks willing to work with you to re-establish your credit after bankruptcy.
Once referred to as sub-prime credit cards, the tarnished image no longer exists and even large credit lenders have cautiously begun offering credit cards after bankruptcy.
These are secured credit card accounts. When you are accepted for a new credit card, you place a specified amount of money in a secured account.
The money guarantees the payment of your credit debt should you fail to pay it on a monthly basis as agreed. In the past, secured credit cards were not always reported to credit rating bureaus.
There is not reason to have a high fee, high interest rate credit card unless the lending bank reports monthly to rating agencies.
Today, well known lenders such as Orchard Bank, specialize in providing accounts to those who ask “how can I get a major credit card after bankruptcy”. Most of the secured credit cards can be used just like a card from any major lender.
Changes in Credit Laws
Recent changes in credit card laws that took effect in 2010 have made the secured credit cards more useful to consumers.
The fees on such accounts have traditionally been excessively high and often the new account holder found the full spending limit of his new card was taken up with fees for initiating the new account.
Today, lenders may not charge fees for a secured credit card that total more than 25% of the spending limit the first year after the card is issued. However, in successive years there is no limit to fees lenders might impose.
With bankruptcy, your best option is to obtain a secured credit card from a lending institution that reports monthly to credit bureaus. Plan to use that card monthly for one year and pay every monthly statement on time.
If you want to avoid high finance charges, you can pay off the balance monthly and at the same time add good information to your credit file.
At the end of one year, you will most likely be able to replace your secured credit card with a standard account from a major bank.