There are a number of credit card choices available regardless of your credit score. The terms and rates you will be offered depend largely on your credit score, so taking the time to check them out is essential to making the best decision, not only for your current situation but for your future credit rating.
Verve, a MasterCard that is available from Mid America Bank, is marketed to people who currently have or have had problems with their credit in the past. This means you have to carefully look into what Verve is offering before signing on as there may be better deals out there for you. One thing to note before continuing is that Verve has a very high acceptance rate for people who apply for the card, so the chances you can get some immediate credit are very good.
As expected, Verve will report the handling of your new credit line to all three major credit reporting agencies. If you handle your new found credit well, you will see better offers become available sooner than later.
First, there is an annual fee of $99 for the card, but it won’t cost you anything upfront as they will deduct t from your opening line of credit. The amount they offer will depend on a number of factors, so if the amount they offer is too small for your purposes (after deducting the $99) you can simply not activate the card and cancel it upon receipt. That $99 comes out to be about $8 a month, so be sure to consider that when it comes to your APR.
The APR for all purchases is a variable 21.9 percent. That means when national interest rates go up your rate will likely increase as well. This rate is the same for cash advances. A rough idea of what that will cost you per month is if you carry a balance of $100 throughout the year you will be paying about $2 a month in interest.
As with most credit cards you have 25 free days of interest each month. That means if you pay off your entire balance each month the 21.9% interest rate really means nothing. This is one of the advantages of wisely using a credit card – you don’t have to be financially drowning in debt regardless of the APR.
But pay late or have a payment returned and it will cost you a hefty $38 for each event. Most credit card companies will waive the first time you can’t make your monthly payment, and you should expect verve to follow the industry practice. But the fact this is a card marketed to people who have shaky credit, you really shouldn’t think about needing this option.
One of the huge positives of having a Verve card is it pays you 1.5% cash back on purchases of goods and services (not cash withdrawals). While getting $1.50 for every $100 you spend may seem like nothing, most cards of this type don’t offer any cash back rewards programs. Beyond that, it helps you start focusing on saving when you can – even if it is a small amount.
Making a Decision
These are the basic numbers you need to make an initial decision. One important point that needs to be kept in mind is that not every credit card should be kept forever. The Verve card, due to its annual fee and high APR, should be paid off in full as soon as you can get another credit card with a lower APR and no annual fee. But if you need it now, take advantage of the offer and use it wisely.
First, the 21.9% APR is very high, so you should look for a card with a lower rate. If the national interest rates go up, that 21.9% could easily jump to 25%, meaning $1 of every 4 you carry on your balance will be in interest.
For many people, a solid customer service support team is essential when choosing a credit card. Verve’s reputation is less than stellar. This can be a huge problem if you run into trouble making a payment on time or just having some general problem with your card.
You may have to pay a security deposit beyond the $99 annual fee to get the card. It depends on your credit rating or FICO score. Since the card is intended for people with bad credit, usually new approvals are required to plunk down between $50 and $500 to get it. The closer you are to the higher end, the more likely you should be considering a debit card or other form of cashless currency.
At best, this is a temporary card that shouldn’t be on your books for more than a year. See it as an opportunity, not a solution. The real solution is to take advantage of the opportunities available to get your financial health back where it needs to be.