Instant approval bad credit credit cards are specifically designed to help people who have a history of poor credit. Missed or late payments, defaults, account delinquencies and bankruptcies will be identified during the credit scoring process. Chapter 7 will show for 10 years and other credit transgressions will be displayed for 7 years. The best credit cards for people with bad credit are an alternative for otherwise ineligible customers.

Advantages of Instant Approval Bad Credit Credit Cards

  • Fix bad credit scores. An unsecured or secured instant decision credit card is an affective way to rebuild credit. Use less than 30% of the allocated credit limit each month and settle the full balance within the designated grace period for a higher credit score. This will help to increase the likelihood of approval for mainstream, loans, mortgages and cards in the future.
  • No credit scoring. Most lenders perform a credit check to assess the risk of a would-be customer defaulting on the agreement. Bad rating credit cards are offered to people without the need for credit scoring which dramatically increases the likelihood of creditor acceptance.
  • Make reservations. Credit cards for people with bad credit can be used to reserve a hotel room or book a car in for repair. A lot of merchants will only accept a customer who is able to provide a card as they are then guaranteed to receive payment.
  • Undetectable. A credit card for poor credit looks and works in exactly the same way as a normal card. Unless an expert in adverse credit financial products, it isn't possible to tell the difference.
  • Emergency situations. It is always useful to have a charge card in case a genuine financial emergency crops-up. Just don't use a poor credit card for frivolous purposes.

Disadvantages of Instant Approval Bad Credit Credit Cards

  • Interest and charges. Due to the high customer default rate, the rate of interest and charges are usually a lot higher. Jo Thornill, of Financial Mail, stated that: "Providers, which include Barclaycard, Capital One, SAV Credit and Vanquis, have a reputation for extremely high interest charges, often between 35% and 40%." Others apply up-front charges.
  • Low credit limit. Unsecured cards typically have a low limit so they are only suitable for small purchases. Provided that all repayments have been made punctually, most lenders will review this after a period of 6 months.
  • Loss of collateral. A secured bad credit credit card means that the customer will need to provide collateral, such as property or cash deposit, to benefit from a higher credit limit. Default will lead to any collateral being sold to clear the outstanding balance.
  • Personal debt. Instant approval bad credit credit cards make it easy to get caught-up in the trap of impulse buying. It takes just seconds to spend money, but a lot longer to pay it off. People with financial difficulties, should identify solutions to credit card debt before borrowing money.

Are Credit Cards for People with Bad Credit Advisable?

It isn't the fact that instant approval bad credit cards are inherently bad, it is the way they are managed that creates the problem. A credit card for bad credit provides a source of credit repair help, but it can also lead to personal debt problems. If unable to effectively manage personal finances, it could be argued that a bad credit rating credit card could be counterproductive. There is no substitute for exhibiting self-control and discipline when using a credit facility.