A new player in the market of bad credit cards is the Household Bank, part of HSBC. MasterCards issued by the Household Bank are designed for applicants with bad, poor and fair credit, offering interest rates that are competitive in the sub prime market. However applicants should be aware that it is not until an application is submitted that the actual card one qualifies for will be decided by the bank. This can effectively lead to hasty decisions on the part of the applicant.
It cannot be stressed enough that if an application is pre-approved for a card the applicant should not act hastily by immediately signing up. Terms and conditions attached to the cards are not issued until an applicant receives a successful pre-approval, with full fees only disclosed at this point. Time should be taken to ascertain if an application has resulted in the offer of a secured or unsecured MasterCard.
HSBC issues an assurance that applications do not negatively impact on ones credit score. The primary benefit of using credit cards for those with poor credit is that responsible use can improve ones credit score. Household Bank cash back MasterCards automatically report to all three major credit bureaus.
Approved applicants will be issued with either a secured or unsecured card, both of which offer cash backs. Secured cards require a minimum deposit of $200 which will be held in a HSBC account. The secured MasterCard carries an annual fee of $35, though this is waived for the first year. The introductory APR is 0% for nine months, before reverting to a low 7.9%. This compares favourably with the higher APR of 19.9% levied on the unsecured card, and makes the card more attractive for anyone who routinely carries a balance.
The unsecured Household Bank MasterCard also offers a nine month introductory period with 0% APR. The annual fee is however not disclosed until an applicant receives pre-approval. The annual fee may be free or it could range up to $39, making it a more expensive card to carry than the secured one, particularly in light of the much higher APR of 19.9%.
Disclosed fees on both cards are the same. The cash advance APR is 20.9% with a fee of 5% ($10 minimum). The foreign transaction fee is a straight 3%, and the penalty APR is 29.49% which can be applied if a minimum payment if made late.
Unusually for credit cards designed for those with poor credit, cash backs are available. Two points are issued for each $1 spent. Points can be redeemed for merchandise or gift certificates once 500 points have accrued. More lucrative cash backs are available when 2,500 points have accrued. A cash back of $25 is available for 2,500 points, equating to $25 for each $1,250 of spending. Once again full disclosures regarding the cash back program are only available once an applicant has been successfully pre-approved for a card.
Both cards represent a good deal for those who need a credit card for poor to fair credit, as it is unusual to find bad credit cards offering 0% introductory offers. Unless balances are paid in full each month the secured card actually represents the better deal of the two cards. However applicants will not know which card they qualify for until an application is submitted. Once again the importance of reading the terms and conditions that are only disclosed when an application is accepted, cannot be stressed enough.