M. Heather Castle
CFP(R), ChFC(R), AIF(R), Lecturer, David Nazarian College of Business and Economics, California State University, Northridge
What are the most important things to look for in a fair-credit credit card?
I tell clients to look for credit cards from companies that illustrate that they want to partner with their customers to help them build and protect their credit. This means companies that offer free monthly credit score monitoring, offer the ability to set the payment due date to better match individual’s paycheck cycles and late payment forgiveness.
Why don't more banks and credit unions offer credit cards to people with fair credit?
Many banks and credit unions don’t want to take on the risk of potential credit card defaults. This is why it’s so important to help individuals especially young adults the importance of building and keeping good credit.
Does each credit card company define "fair" credit the same way?
No, just like credit bureaus will give similar but not the same scores to an individual, most credit card companies generally will have different definitions and criteria used in their definition of “fair” credit. This is why it’s important to ask if a company doesn’t make it clear how they are determining and defining an individual’s credit. Also, individuals need to review their credit reports to ensure the credit bureaus report is accurate. If there are any inconsistencies or errors and bring them to the credit bureaus’ attention.
When you have fair credit, is it better to get a credit card with an annual fee or one that requires a refundable security deposit?
In general, I’m not a fan of credit cards that carry an annual fee or security deposit. I don’t feel individuals should have to pay more than the annual interest expenses for access to credit.
That said, even I have credit cards that carry an annual fee. I do recommend doing some investigating into what other benefits a credit card offers and weighing those benefits to the annual cost as well as examining if those benefits are also fitting the needs of the customer. If the benefits don’t carry a value for the customer that outweighs the annual cost of the card, then that credit card isn’t the right one for that customer. For example, if someone doesn’t travel frequently then a credit card that offers extra points for traveling wouldn’t be a good choice.
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