Best Credit Cards after Chapter 7 Bankruptcy
There are many reasons why Americans might have to file for Chapter 7 Bankruptcy protection. Often, those who file this form of bankruptcy have had their finances devastated by extended unemployment, medical bills, or divorce. In other instances, people make a series of poor decisions that results in more debt than they are able to pay off. The advantage of Chapter 7 bankruptcy is that it can discharge most of your debts, although there are some things like student loans, child support, and alimony payments that must still be made.
But once your bankruptcy has been discharged, then you are able to begin the process of rebuilding your credit. One of the most important tools to accomplish this goal is a secured credit card, which is very similar to other credit cards, except that it requires the payment of a refundable security deposit before an account can be opened. After that, you must still make a minimum payment each month, and you will incur interest if you choose to carry a balance. But since these cards are offered to nearly anyone who has had their bankruptcy discharged, they are perfect for those who have completed Chapter 7 proceedings.
Having a secured card and managing it responsibly will help you to quickly rebuild your credit. In addition, having any kind of credit card will make it much more convenient when you are traveling. For example, using your credit card to reserve a hotel room is much easier than using cash or a debit card. And when renting a car, it is much more difficult when you don’t have a credit card. In addition, some secured credit cards even offer rental car insurance, allowing you to avoid the costly policies sold by car rental agencies. Credit cards also offer more robust legal protections against fraudulent purchases than debit cards. Finally, some secured credit cards offer valuable travel insurance and purchase protection policies that you can’t find with debit cards. After a year of on-time payments, most secured card holders find that they are able to qualify for a standard, unsecured credit card.
Here are five of the best credit cards for those who have completed their Chapter 7 Bankruptcy:
The Capital One Secured MasterCard is one of the rare secured cards that doesn’t have an annual fee. New cardholders submit a required refundable security deposit of $49, $99 or $200 depending on their creditworthiness. This results in an initial credit line of $200 to as much as $3,000. The standard interest rate for purchases is 24.99%.
In addition, this card offers numerous benefits including extended warranty coverage that adds an additional year to the manufacturer’s warranty of covered purchases. It includes auto rental insurance, travel accident insurance, and a price protection program. Also, cardholders receive access to Capital One’s Credit Tracker App, which offers a free monthly TransUnion credit score as well as a what-if simulator to allow you to predict the result of future actions on your credit score. And with all Capital One cards, there are no foreign transaction fees imposed on transactions processed outside of the United States. Finally, this card is compatible with the Apple Pay mobile purchasing system.
The USAA Secured Card American Express places your refundable security deposit in a two-year Certificate of Deposit, which is an interest earning deposit account with a minimum of a $250 deposit. Currently, the interest rate is 0.54% APY. This card offers benefits such as car rental insurance, extended warranty coverage, price protection, and travel accident insurance. Members of the military receive special benefits such as a 4% APR rate. The standard APR is 6.9% to 25.9% depending on your creditworthiness, but those who have had a Chapter 7 Bankruptcy should expect to receive the highest rate. The annual fee for this card is $35, and you must be a member of USAA to apply.
The Primor Secured Visa Classic card is offered by First Choice Bank and has an annual fee of $39. In addition, it has a relatively low APR of 13.99% APR. As with other secured cards, this card reports your payments to the three major consumer credit bureaus, allowing you to build your credit as quickly as possible by making on-time payments.
The Primor Secured Visa Gold card is much like the Classic version, but it features an even lower APR for purchases of 9.99%. On the other hand, it has a slightly higher annual fee of $49.
The Open Sky Secured Visa card offers a quick application process and requires a refundable deposit of at least $200. The standard interest rate for purchases is 17.64% APR, and there is an annual fee of $35.
6. Discover it Secured Card
Discover now offers a secured card that features 2% cash back at gas stations and restaurants, and 1% cash back on all other purchases. Cardholder receive their first late payment fee waived automatically and a free monthly FICO score. There is no annual fee for this card.