There is good news and bad news for post-bankruptcy debtors searching for credit card offers in the coming year. The good news is that more credit card issuers are willing to lend to more consumers, even those who have filed bankruptcy. Credit card solicitations have nearly doubled in the past year and many of them target the sub-prime market, those with little credit, poor credit and those debtors who have filed bankruptcy.
But let's take a look at some of the other changes that might not be good news for borrowers exiting bankruptcy:
- Credit card issuers have raised their interest rates across the board. It doesn't matter how good your credit is, studies reveal that the interest rate is going to be at least 10 points higher than the prime rate. That means that credit card debt just got a lot more expensive. Debtors exiting bankruptcy will be wise to work on improving their credit score before trying to get a credit card so that they can get the best interest rate available.
- Credit card issuers are now focusing on variable rate cards. This means that as the prime rate goes up or down, the interest rate on your credit card will change. For debtors exiting bankruptcy, a variable rate can be risky especially if they are keeping a balance and paying only the minimum required. To avoid the pitfalls of a variable interest rate credit card make sure you pay off your credit card balance every month.
- Credit card issues have implemented new fees, which will make up 48 percent of all their revenue. That's up from 31 percent ten years ago. There will be fees on cash advances, paper statements, paying your bills too late or even making "too many" calls to their customer service center. If you can think of it, there will probably be a fee attached to it. Debtors exiting bankruptcy need to take the time to read the terms of their credit card to make sure that the fees are not excessive.