Having a credit card is a matter of convenience. It enables and empowers you to make investments and buy things for which you are not required to pay up front. However, a credit card is a powerful financial tool, which needs to be used with care to prevent financial damages.
So, when you consider the option of opening a new credit card account, there are several factors that must be taken into account. Again, if you have ever filed bankruptcy, getting a credit card after such an episode, would require considerations of a different level altogether.
So, before understanding bankruptcy related after effects on procuring a credit card, let us look into some general considerations before choosing a credit card:
To begin with, your spending habit is the foremost thing to consider. Choose your credit card based on whether you are going to pay the entire bill every month, carry a balance or use it as a go-to-card for most of your buying needs.
Every credit card comes with an interest rate or what is called an annual percentage rate(APR). Now, even when you choose a credit card with a fixed rate of interest instead of a variable one, be aware that this rate can change in the long run. Also, the interest rates increase every time you spend over your credit limit or make late payments.
There is simply no dearth of fees and penalties when it comes to owning a credit card. Apart from the fees for transactions, there are charges on balance transfers, cash advances and so on. Issuers often keep asking you to increase your credit limit and make a payment by phone.
Balance computation is another trick you should be aware of. If you are going to carry forward a balance, take note of how this charge is calculated. The most common method involves adding together the daily balances and then dividing the sum by the number of days in the billing cycle. In this regard, avoid cards that compute the balance using two billing cycles.
Credit cards come with incentives and reward programs, which are beneficial. However, look for restrictions or expiry date of the programs so that you don’t end up losing your hard earned points. There can be certain limits on how many points you can earn, which should be considered carefully as well.
Getting a Credit Card after Bankruptcy
Applying for a credit card after filing bankruptcy should be discussed with your Philadelphia bankruptcy attorney. Filing a chapter 7 lowers your credit score to a certain extent, which remains the same for ten years from the date of filing the bankruptcy. However, in such a situation, it is not impossible or undesirable to open a new credit card account, only if you consider the following aspects:
Make sure that you have corrected your spending habits and can now, do justice to the financial power that a credit card offers you. If you consult your bankruptcy attorney, he/she might still be against the idea but it is you who have to ensure that there will be no further debt.
Adjust your expectations and know that the credit card facilities you earlier had will not be available now. The cards with higher credit limits and lower interest rates are reserved for customers with good credit score. In fact, your attorney might ask you to avoid applying for cards that you included in your bankruptcy. The simple reason is that these companies might deny your credit card application concerning your financial history.
You can consider applying for a secured credit card, which requires you to deposit the credit limit. After bankruptcy, it is more likely for you to get approved for these cards. These cards are considered less risky by the credit card issuing company or bank. Also, these can help you keep track of your expenses and check your spending habits at the same time.
Above all, if you are applying for a credit card after bankruptcy, make sure seeking the approval and guidance of your bankruptcy lawyer to avoid uncalled for situations from arising in future. If you would like to discuss filing for bankruptcy, the pro’s and con’s do give us a call at 215-735-1060.
We are a debt relief agency that helps people
seek bankruptcy protection under federal law