Not surprisingly, bankruptcy lawyers like me often get questions about life post-discharge. Are there any “best practices” for rebuilding your credit after your bankruptcy (or period of bad credit) is over?
Thoughts about how to re-establish credit after bankruptcy have been written about on this blog. One of the practices frequently discussed involves obtaining a secured credit card.
A secured card differs from a standard card in that you must deposit money into an account managed by the issuing cardholder equal to your credit limit. In other words, if you want a card with a $500 limit, you must first deposit $500 into a savings account at the bank that issues the card. If you fail to make payments, therefore, the bank has the right to seize funds in the savings account.
The Bankrate.com website has an informative article that explains how secured credit cards work and I recommend it to you as part of your research. I also found a helpful article from the Texas Bankruptcy Lawyer web site that offers tips about what to look for when considering a secured card.
So, there is plenty of information out there concerning the features and pitfalls of secured credit card offers. Where can you do your research?
A good place to start is the handy search grid feature at Cardtrak.com. This site allows you to search for secured credit cards and the resulting table will show you the names of the issuers, the annual fee, the APR and other information.
Of course, Cardtrak.com should be the starting place for your research. I would recommend that you use this site to identify two or three possible issuers, before going to the issuer sites and printing out the actual application with the fine print. While the Cardtrak comparison feature is helpful, you should not assume that the terms and conditions of the actual offer will match the summary on Cardtrak. Instead, armed with a list of features that you desire, you can intelligently compare the different offers.
You should also not be afraid of calling the issuers to ask questions. You may have damaged credit but you are still the consumer in a competitive marketplace. Is it possible to get a particular card with a lower annual fee or with a lower interest rate? Perhaps – but you will not know if you do not ask and comparison shop.
The Internet functions as a tremendous resource and leveler of the playing field – when you are shopping for credit cards, do not go into your search with the attitude that the card issuer is doing you a favor. Stand up for yourself and let the end of your bankruptcy function as the beginning of your new and positive financial future.
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