Best Credit Cards after Chapter 7 Bankruptcy

Best Credit Cards after Chapter 7 Bankruptcy

February 1, 2016         Written By Jason Steele

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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:

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Capital One is one of the top credit card issuers, and they offer a very good secured card. Any new customer must submit a refundable security deposit of $49, $99, or $200, depending on your credit worthiness. You will then receive a credit line of $200. You will also get access to a higher credit line after making your first five monthly payments on time with no additional deposit needed. You will build credit by using this card since it reports to all three of the major credit reporting bureaus. This card does not have an annual fee, and has an interest rate of 26.74% (Variable).

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Discover has one of the top secured cards on the market. What sets the apart from a number of other secured cards is the cash back feature. Cardholders can earn 2% cash back on all gas and restaurant purchases up to $1,000 in combined purchases each quarter; and 1% cash back on all other transactions. Plus, Discover will match your cash back rewards at the end of the first year. The card requires a security deposit of at least $200, and reports to all three major credit bureaus. After eight months of responsible use, Discover will consider transitioning you to an unsecured card. It has a standard APR 24.49% Variable for purchases, and an introductory APR on balance transfers for the first six months as a cardholder. There is no annual fee or foreign transaction fee on this card.

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Citi introduced the  for people that need to start building their credit score. A security deposit of at least $200 is required for this product. But unlike a prepaid card, this card will help build your credit history since Citi will send monthly notifications to the credit bureaus. There are some helpful tools on this card–like Auto Pay, text/email alerts and online Bill Pay–which assist cardholders in keeping track of their financial situation. The card has an APR of 23.99% (Variable). It can be used anywhere that Mastercards are accepted. Unlike a majority of the secured cards on the market, the Citi Secured Mastercard has no annual fee.

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The is another secured card offered by Green Dot Bank. It reports your activity to the three major credit bureaus, so responsible use of the card can help build your credit profile. The card has one of the lowest APRs of any secured card on the market: 9.99%. The credit line you receive will be determined by the amount of your security deposit but there is a minimum deposit of $200 and a maximum of $5,000. There is a $49 annual fee on this card.

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The is marketed by Green Dot Bank to people who may not have a bank account. This card may help you build your credit score if you use it prudently since your activity will be reported to the major credit bureaus. There are no monthly or one-time fees on this card, but there is an $39 annual fee. A security deposit of at least $200 is required for this product. The card has an APR of 19.99% (F). It can be used anywhere that Visa is accepted.

The information contained within this article was accurate as of February 1, 2016. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Jason Steele

Jason Steele is a freelance journalist and an expert on the credit card industry. He contributes to several of the top personal finance sites, and his work is syndicated to mainstream outlets such as MSN Money, Yahoo! Finance, and Business Insider.
View all posts by Jason Steele
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