Getting Credit Cards after Bankruptcy

21 Apr Getting Credit Cards after Bankruptcy

Most, if not all, of my clients tell me they don’t ever want another credit card. I just laugh and tell them they will want one in a few months because that is what society has taught us. Besides you need one to rent a car, make hotel reservations, and the like. (Using a debit card would be better.)

But the credit card companies can’t wait to start soliciting people who have filed bankruptcy and, thus, the temptation begins. What should you think about before getting a new credit card:
A. Don’t apply for a credit card until you are ready.
B. Avoid accepting too many offers and avoid accepting a credit card just to get a discount at a store.
C. Remember that lenders are looking for people who run up big balances because those consumers pay the most interest. Just because creditors may be pursuing you to open an account with them does not mean you can afford more credit.
D. Check terms related to late payment charges and penalty rates of interest. Try to avoid cards with late fees as high as $25.00 or more or penalty interest rates greater than 21%.
E. Don’t accept a credit card just because you qualify for a high credit limit.
F. Beware of temporary “teaser” rates.
G. If your rate is variable, understand how it may change.
H. Interest rates are important in choosing a card, but should not be the only consideration.
Remember, the rate only matters if you carry a balance from month to month. Other
terms can add to your cost such as late charges, annual fees, over-the-limit fees,
account set-up fees, cash advance fees, and the method of calculating balances.
I. Get a card with a grace period and learn the billing method.
J. Always read the disclosures and the credit contract and keep a copy for your records.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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