You can get by without a credit card, but who wants to? As if those Visa commercials weren’t annoying enough (you know…the ones where everything comes to a screeching halt when someone pays with cash instead of their Visa Card), you have probably already noticed that there are some things you just can’t do without a credit card like renting a car or reserving a hotel room. What do you do if you have really bad credit?

There is actually a pretty large market for credit cards for consumers who have bad credit. By “bad credit” I don’t mean a few missed payments or some maxed out cards, but instead a credit history packed with disregarded accounts, delinquent payments, and credit balances that are way past their limits. In other words, your credit history would make any traditional lender shudder and run away. Not so for some credit card issuers, who thrive on offering credit cards to people with really bad credit.

It’s not that these companies are benevolent and are actually trying to help people with bad credit. There are a few reasons why some credit card companies are willing to give you a credit card even if you’re in the midst of some major financial issues.

You don’t get much of an available balance. A credit card for someone with really bad credit might feature an initial available balance of $200 or something equally small, but before you start planning out your $200 shopping spree you should keep in mind that there will certainly be some fees that will be taken directly out of your available balance. You might have an issuing fee, an annual fee, a processing fee, and any other number of fees. In other words, your credit card arrives in the mail with a balance already owed, and you haven’t even gone shopping yet.

It’s possible that you could get a card in the mail with a $200 credit limit that already has a balance of $100 or $150 because of all the fees tacked on by the issuer.

The fees just keep coming. Credit card companies catering to folks with bad credit make a lot of money from the fees they charge. You might have a monthly fee, a per-transaction fee, or you might even have to pay a fee every time you call customer service and ask a question.

The interest rates are sky-high. While everyone else in the world seems to be paying a low APR on their credit cards, your rate will be something much higher. It will be so high that you’ll probably be embarrassed to talk about it with other people.

Discharged bankruptcies will be welcomed with open arms. If your bankruptcy has recently been discharged you may think that you’ll have a hard time getting credit. The fact is, however, that if you’re willing to pay the really high interest rates and the barrage of fees then you’ll have no problem finding a credit card company willing to issue you a card. Why is this? The reason is simple: bankruptcy laws do not allow people to declare bankruptcy again within a certain amount of years after a bankruptcy has already been discharged.

In other words, you have to pay the credit card because bankruptcy just isn’t an option. That fact is incredibly attractive to credit card companies.

Why bother?

Obviously, your first inclination might be to scrap the whole idea of ever getting a credit card. If your credit is indeed horrible, though, there are some reasons why you may want to go ahead and pay the exorbitant fees and embarrassing interest rates:

1. You have to start somewhere. You can’t expect prime lenders to jump at the chance to give you a credit card if your credit history is atrocious.

2. Getting a credit card account on your credit history that is actually paid on time will only help your score.

3. The credit card company might eventually lower your interest rate as you demonstrate your ability to make timely payments.

This type of credit card shouldn’t be a permanent solution. You should have the eventual goal of qualifying for a credit card at an average interest rate someday.

You should also keep in mind that you’ll raise your credit score a lot faster if you work on the delinquent accounts you have right now in conjunction with keeping up with payments on your credit card. Don’t think that making payments on your credit card will somehow magically erase years of late payments and delinquent accounts on your credit report. It just doesn’t work that way.

Related posts:

1. Rich People Gone Broke: Donald Trump
2. A Primer: Secured Credit Cards
3. The Business of Credit Cards – Part II
4. Credit Cards Going Extinct? We Don’t Think So
5. The College Student’s Guide to Credit Cards