What Credit Card Approves Everyone?

February 27, 2012 No Comments »
What Credit Card Approves Everyone?

Credit card Q&A: “What credit card approves everyone?”

Ah yes, the age-old question, typically asked by someone with a less than perfect credit score.

Well, without further ado, prepaid credit cards do not require approval. That’s right. 100% approval folks! But that’s not necessarily a good thing, or anything special.

Why do you think financial guru Suze Orman just released a prepaid credit card called “The Approved Card?”

Guaranteed Credit Card Approval…

Well, prepaid credit cards aren’t really credit cards. Sure, they may look and feel like normal plastic credit cards, and you can use them to buy goods and services, just like a credit card.

But in reality, a prepaid credit card is simply a payment vehicle that must be loaded with cash before it can be used, hence the 100% approval.

However, many prepaid credit cards come with zero liability protection, meaning you won’t be liable if unauthorized charges are made using your prepaid credit card in the event it’s lost or stolen.

So really it’s just a convenient way of paying for things without having to deal with carrying cash, which can prove to be a liability.

Unfortunately, prepaid credit cards also tend to be fee-ridden, which is a huge drawback. Sure, you may get approved every time, but you’ll be paying a card purchase fee, a maintenance fee, an ATM withdrawal fee, a reload fee, etc.

At the same time, your prepaid credit card won’t be reported to the credit reporting bureaus, meaning your credit history won’t see any benefit.

Sounds like a pretty lousy deal, eh? Well, there are some alternatives, such as free checking accounts that come with cash back.

Two such offers are the ING DIRECT Electric Orange checking account and the PerkStreet Financing checking account.

Both will put money in your pocket, as opposed to sucking you dry. But again, these don’t help build credit history, which is crucial long-term if you want to borrow money at the lowest cost.

What Credit Card Am I Eligible For?

Assuming you want an actual credit card that will be reported to the credit bureaus (so you can raise your credit score and save money), you’ll need decent credit. I know; it’s a catch-22.

For the record, a credit score below 620 is typically considered subprime, so you’ll want to be above that number to qualify for a credit card (credit score range).

To get approved for the best credit cards out there, you’ll want to be well above that number.

[How do you get a credit card?]

If for some reason your credit score is below that level, or even higher and you still get denied, you can always try applying for a credit card with the bank you currently do business with.

Assuming you have a checking or savings account with your bank already, they’ll know a little bit about you and should feel more comfortable giving you a line of credit.

However, there’s still a chance you can get denied with your own bank. Enter the secured credit card.

In short, a secured credit card allows you to spend up to the amount of collateral you put against the card. So you must have an associated savings account or similar to draw against.

The good news is secured credit cards are reported to the credit bureaus, so over time you’ll be able to transition to an unsecured credit card (conventional credit card), assuming you’re a good borrower.

And because secured credit cards probably have close to a 100% approval, this is a better way to go than a prepaid credit card, which doesn’t come with the credit-building benefit of a secured card.

But none of these options can replace a good credit score, which is paramount if you want to save money and get approved for just about any credit card you apply for.

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