Best Credit Cards After Bankruptcy

The ill effects of bankruptcy on your credit scores linger on for seven years or more.  If you are looking to get a credit card while having such  bad credit history, then you may think it'll be a considerable amount of trouble obtaining one. But although difficult, it is not impossible to get a credit card in such cases.  First, it is important to know what the best credit card after bankruptcy would be for you.

Since the number of people filing for bankruptcy has increased in the last few years, you may or may not be surprised to find many banks as well as financial institutions that are readily providing people with bankruptcy a chance to apply for new credit cards. 

This is primarily because credit cards have become an important tool for credit repair purposes.  As a result of this, a new development has taken place in the finance industry which allows people with bad credit the opportunity to obtain a credit card and enjoy its privileges while working towards repairing their battered credit.

Secured Credit Cards

It is true that you will find several credit card issuers claiming to have the best credit cards after bankruptcy, but not everyone can help you in this regard. Undoubtedly, the best credit card after bankruptcy is a secured one. 

In fact, you'll find that many people who have filed bankruptcy are actually making use of secured credit cards while they restore their credit.  Here's the reason why:

• In essence, a secured credit card works exactly in the same manner as a secured loan. In such cases, the cardholder will be required to provide some sort of collateral that will enable them to secure the loan and receive the credit card. This is an important security required by the credit card finance company so that they know you will be able to make your repayments on time and in case you don't they will have some way of covering their losses.

• Another reason why secured credit cards are considered to be the best credit card after bankruptcy is that unlike the regular ones your credit rating is not considered to be the gauge for determining your credit limit. Rather the total amount of money deposited in your bank account will act as the gauge for determining your credit limit. Obviously, the larger the amount deposited in your bank account the higher your credit limit will be.

Checking Accounts

Prior to securing the best credit cards after bankruptcy, you will be required to open a checking account in a bank. It is this account that will serve the purpose of the collateral for receiving the credit card. 

In case you fail to make the monthly payments on your credit card, the issuer will have the right to deduct the payment from your bank account, which is in fact the security deposit.

Although this may sound very intimidating, the fact of the matter is that the finance company will more than likely not start deducting these payments from your bank account until you have missed five or six payments consecutively.