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"Credit repair credit cards could cause problems"

By admin | July 1st, 2009 | Credit Cards

It has recently been claimed that credit cards that are designed to repair the credit of users could actually end up causing more problems for the cardholders.

These credit cards, often issues by lenders such as Vanquis and Capital One, are often taken out by consumers that have had their credit damaged and want to attempt to repair it again.

However, the interest rates on the cards can be extremely steep, and those that do not repay the balance quickly could find themselves sinking deeper and deeper into debt, which could ultimately make their problem even worse.

A recent report has claimed that in many cases borrowers turn to these cards in desperation because they have no alternative when it comes to getting credit because of their past credit history and low credit score. However, whilst many may be hoping to repair their credit rating through the use of these cards some end up in a worse financial mess than they were in before they took out the credit card.

More and more people are finding themselves in a situation where they are only able to get these credit cards, particularly since the recession set in.

Although the credit limits offered on these credit cards are relatively low, the type of situation that borrowers are in when they take out these high interest cards means that they are more likely to struggle to repay the balance quickly, and are hit with interest and late charges.

One industry officials suggested that borrowers look at other options, and that they remember that there are things that they can do if their financial situation has taken a turn for the worse due to something out of their control.

She said: ‘Also, don’t forget you can put a note on your credit file to explain your circumstances. It may be the case that you’ve had an excellent credit record in the past, but due to redundancy you’ve fallen into difficulties. As a result, the lender may look more favourably on any application.’

Tags: bad credit credit cards, credit repair credit cards

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