Post-Bankruptcy Credit Card Scams

A huge percentage of bankruptcy filings are due to credit card debt. This doesn’t mean the people spent frivolously; many people rely on credit cards to take care of unexpected expenses or as a safety net. But it’s easy for that debt to get out of control, which can make it scary to think about getting a credit card again after bankruptcy. People may also worry that they’ll never have access to credit again, which can be a vulnerable feeling. Regardless of your feelings, the best way to rebuild your credit is to responsibly use a credit card. Many consumers must start with a secured card, and the interest rate and fees can be quite high. This card is to be used as a tool to improve your credit score only. You may want to make a small purchase each month or use it to automatically pay a small monthly bill. The most important thing is to pay off the balance completely each month, which can quickly improve your credit score. Before jumping at the first offer that comes your way, you’ll want to do some research to avoid any scams or companies that are just seeking to take advantage of consumers who are trying to rebuild their lives.

Be Aware of Scams

You may be surprised by how soon after bankruptcy you’ll start receiving credit card offers in the mail. They may or may not be companies you want to work with. If the application asks you to call a 900 or 967 number, it’s best not to move forward. These toll numbers could lead to a very high phone bill as you sit on hold and wait to be transferred to the various company representatives. You should be able to apply online or through mail. Also beware of “credit card” offers from catalogs or department stores. These are more like credit lines with high interest rates. You’ll only be able to use the card with their company to purchase their merchandise.

It’s good to be prepared for a high interest rate and also important to read all of the fine print. Some companies offer a low introductory “teaser rate,” but that can increase greatly after a short period of time. The goal is to never carry a balance, which eliminates paying interest, but forecasting the future can be difficult. You don’t want to get stuck paying a ridiculous amount in interest.

As a “favor” to consumers, some credit card companies will allow you to charge beyond your credit limit. While this may sound like a great perk, you’ll get hit with an “overlimit fee” in addition to the amount you charge and corresponding interest. This is usually not an automatic feature; to avoid these fees, choose not to “opt-in” to this service.

Time to Rebuild

It may be scary thinking about having a credit card again, but this is the very best way to rebuild your credit. You may not think your credit score matters, but if you decide to make a large purchase, such as a home, you’ll most likely need to take out a loan. Having good credit will result in better interest rates and lower payments. It’s also important to focus on building up your savings account to reduce the odds of needing to depend on credit when emergencies arise. Soon you’ll be back on track and planning for your financial future.