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How to shop for a credit card after bankruptcy

Filing for debt relief through bankruptcy protection gives many people in Washington, D.C., a second opportunity to rebuild credit. Once they are back on their feet and thinking about applying for a credit card, experts say the way to credit recovery should include a wise approach to the choice and use of credit cards.

Equifax reports that recessionary restrictions imposed by credit card companies have loosened. In the first quarter of this year, 60 percent more credit cards were issued to consumers with lower credit scores - under 620 - than last year.

Credit may be easier to get now, but financial counselors advise that you refrain from grabbing the first card offered. Consumers who are rebuilding credit during or after bankruptcy should move carefully when reestablishing a relationship with a credit card company. Counselors recommend correcting any credit history flaws before applying for a new credit card. Obtaining a copy of your credit report and fixing inaccuracies can reduce the chance of being overcharged for interest.

Consumers with troubled credit histories are advised not to return to old spending habits. Money experts say responsible credit card use includes the discipline to pay off card balances monthly, eliminating unnecessary accumulation of interest. Automatically using credit cards for every purchase can sink a consumer's budget quickly.

Secured credit cards, which allow credit up to the amount of a consumer's cash deposit, are one option for individuals with damaged credit. Financial experts say secured cards initially may be easier to obtain than they were a year ago, but can include advance fees. Shopping around for an unsecured card may save money.

An executive with the Center for Responsible Lending warns that consumers can be distracted by credit card extras. Bonus points, gift cards and add-ons like identity theft protection are perks that many individuals never use or don't need. Most advise consumers to look beyond the advertised perks to make sure the actual credit card is a good fit for them.

Source: Fox Business, "Eight Things to Consider Before Diving Back in to Credit Cards," Marcia Frellick, Aug. 4, 2011

1 Comment

These are some excellent tips for people who are looking to rebuild their credit with a new credit card. Choosing the right card is important, and once a new card has been obtained, it is vital for people who have previously filed for bankruptcy to tread lightly and make sure they can pay off their entire balances each month. Great post.

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