is it really MSE worthy, to hase a credit card on offer for folks with bad credit?

brightonman123

just seen on the latest MSE mailout (and other places), a 0% credit card from capital one.. specially targetted at those with poor credit rating..

just the kind of people who really shouldnt be taking on more debt, but clearing off what they have already..?

Premier_2

As Martin often says:

Is Debt Bad? No only bad debt is bad!

This credit card is advised for those interested in rebuilding their credit profile, and so perhaps be in a position in the future to take advantage of the better credit deals that do exist for those with good credit history.

There are many people with credit cards that pay off the amount owed in full every month.
As this deal also has a 0% promotional rate, applicants way wish to take advantage of this opportunity to pay off more expensive debts.

If anyone wants to lend me some money for nothing, I'll take it

MSE_Martin

This card was primarily aimed as a credit rebuilder card. We thought very carefully about the debt angle before hand. Here's what it said.

New 0% credit rejects card
New card allowing you to rebuild your credit score plus a short 0% period
An easy way to (re)build a poor credit history is to get any credit card, regardless of rate, spend a little each month, but always REPAY IN FULL on time to avoid interest. Yet a new deal's got a twist...

Top 'easier-to-get' card: Go via this link to a comparison site and the Capital One* Classic card gives accepted new customers 0% spending until their June statement (so 3mths +), yet after that it jumps to a mammoth 34.9% rep. APR.

Who can get it? It's a specialised poor-credit card, so even some with limited CCJs and defaults may be accepted (not bankruptcy).

How to use it? Most should just spend & clear it each month. Yet for the self-disciplined needing short-term borrowing who can repay WITHIN 3mths, it is an option. It may also be an emergency tool for those facing repeated bank charges - put a little spending on this instead of from your bank account, to get that under the limit, then try and clear the card after (but keep to a tight budget & be careful). Just aim to ensure the debt is FULLY CLEARED before the rate jumps. FULL step-by-step info and more card options in the Updated Guide: Top Credit Rebuild Cards Related: Free Credit File Check. See Official APR examples.
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First of all do note the primary intent of this card is as a credit rebuilder, for that purpose easy to get counts APR is irrelevant as you should always repay in full.

Now lets go to the debt bit

"How to use it? Most should just spend & clear it each month. Yet for the self-disciplined needing short-term borrowing who can repay WITHIN 3mths, it is an option. It may also be an emergency tool for those facing repeated bank charges - put a little spending on this instead of from your bank account, to get that under the limit, then try and clear the card after (but keep to a tight budget & be careful). Just aim to ensure the debt is FULLY CLEARED before the rate jumps."

We thought long and hard on this.

Firstly there are sometime people need borrow - it can cut costs and it is far better those people use this card than any existing credit or payday lenders which are around everywhere at the moment. So to not tell people considering doing that would be a disserve, at least this way we can also guide them.

Also even at 35% while its hideous its not as bad as bank charges, to show you how much we thought about this in the writing the phrase "Just aim to ensure the debt is FULLY CLEARED before the rate jumps." is very deliberate. While normally you should pay it off in full, if you were doing this to get you out of a bank charges hole, then even having some debt on the card is better than having a bank charge as then it can be £35 for £1 in a day - where as this is £35 per £100 in a year. That's why I put the phrase "aim to" in.

It isn't an easy one - but I think we warned, warned, and warned again about how to do this and used right this can be a help to some in trouble.

Martin