Subprime Cards: Roadblocks to Better Credit

Raising your credit score involves getting new credit and proving you pay your bills on time. Reforming bad credit card payment habits isn't so tough. But getting a new credit card is. It's the reason so many people turn to subprime credit cards, which are easier to get than regular credit cards.

What makes a credit card "subprime"? It gives credit to people with low credit scores, subprime borrowers, who either have no credit or bad credit.

What makes these cards "roadblocks to better credit?The hefty fees and high interest rates cardholders are subject to. Many subprime credit cards charge fees well over $100 that eat into your $300 credit limit leaving you with little to no purchasing power. USAToday compares the cards to payday loans, with annual fees of $248 and APRs of 486%.

Some people with a tarnished financial history assume that the only way to raise a poor credit score is to use a costly subprime card to eventually qualify for a traditional card. Some don't realize that the cards carry exceedingly high fees — and that given how little credit they actually offer, it's hard to use them to raise your score.

Subprime cards may be easy to get, but they provide little benefit, if any at all. Department store and secured credit cards are also easy to obtain, cost less, and actually can help improve your credit, if you use them correctly.

Read the full story by USAToday: Subprime cards' high fees can add to debt trouble

More Reading:
The Worst Types of Credit Cards | Rebuilding With Secured Credit | Credit Cards Based On Credit Score