Credit cards were once entirely based on credit. Only those who had good credit received offers; those who didn’t have good credit received little to no offers. This has changed over the past 10 years with bankruptcies on the rise and the average credit score in the 600s. Most Americans no longer have stellar credit. In fact, most have below-average credit scores. Still, mail boxes are literally stuffed with credit card offers, regardless of credit history.

Since the credit card is such a necessity in every day life, practically every adult American has one. They’re necessary for everyday tasks like purchasing items online, even opening up an account at the local video store. They’re good to have around in case there is an emergency and you cannot get to your money in the bank.

Even those with bad credit or no credit at all need credit cards. They are sent several offers each week saying that they’ve pre-qualified for the card. It’s very tempting to sign up for these cards as those with bad credit feel like they have no alternative. What they don’t realize is that these credit card offers all have one thing in common: a big pitfall. This pitfall comes in the form of almost outrageous fees and high interest rates.

Don’t Sign-Up So Quickly

People feel important when someone extends a line of credit to them. This is particularly the case with those who have had problems getting credit cards in the past. They want to immediately get any credit card that may be offered to them. It’s important to not get caught up in the excitement of receiving a letter notifying you that you’re pre-qualified for a line of credit when it’s been so hard to get qualified. You must think things through before ever considering filling out the form.

Examine the letter carefully. Look for any fine print. You’ll notice that there are a lot of terms and conditions. Fees are also listed in the fine print because most people fail to adequately read the fine print. Most likely, you’ll find a lot of “hidden” fees in the fine print that you otherwise wouldn’t have noticed until you started using the card. If you’re unsure of any of the terms in the fine print, you should look it up online. Never, ever sign up for something you aren’t completely sure of.

The big problem with these credit cards is the exceptionally high interest rate given for those with bad credit. The rate may be as much as 25%, though the average is about 22%. You might think that 22% isn’t that bad, but think of it this way: if you purchase an item for $100 and use a credit card with a 22% interest rate, you’ll be paying an extra $22 on the purchase. This adds up when you charge thousands of dollars.

Another problem is that there are a lot of hidden fees and terms with these credit cards. For instance, the late fees may be $50-$100. The interest rate may increase when payments aren’t made on time. In some cases, you’ll have to pay an activation fee to set up the credit card. It turns out to be a lot of wasted money when all these fees and the high interest rate are factored in.

Why Do They Do This?

Credit card companies are in the business for one reason: to make money. They aren’t in it to please customers and they aren’t in it to be the nice guys. They’re trying to invest their money (by letting consumers use it) and then reap the profits (by way of interest rates and late fees).

When it comes to customers with bad or no credit, credit card companies are looking to take advantage of the situation as much as possible. Since it’s a big risk for them to extend credit to someone who isn’t proven to be a good choice, they have to account for the risk by protecting themselves. This protection is the high interest rate and big fees.

Even if the credit card companies don’t get the whole balance of the debt paid back to them, they’ll still usually get a lot of money back because of the fees and interest rate. That’s why they are willing to extend credit to people with bad or no credit because they’ll always get at least some money back on their investment.

What Can I Do?

The easy and simple answer is to not sign-up for credit cards with ridiculously high interest rates. While this is something that many people can do, some will need to have something besides a check-book and cash for purchases or emergencies.

It’s important to remember that you do not always need credit cards for online purchases. Many merchants have begun accepting PayPal, a form of electronic payment. With PayPal, you are able to deposit funds (from your bank account) into your PayPal account and pay for services or items online. Other merchants may accept the Visa Check Card or even debit cards.

As far as emergencies are concerned, most, if not all stores, hospitals and repair shops accept debit cards or checks. You should be able to use these in place of a credit card in dire situations.

While these suggestions may work for most people, there are still going to be some (perhaps you) who absolutely need to have a credit card or two. That’s understandable and there is a solution to the problem besides signing up for a card with a high interest rate. Instead of waiting for the offers to pour in, you should seek them out.

Go to your local bank or financial institution and look for credit card forms. You should be able to find at least a few offers with decent interest rates of 9% or so. If you don’t, it’s not time to give up but rather turn your attention elsewhere.

If you plug the term “bad credit credit card” into Google, you’ll wind up with a lot of search results. Try to find the ones that are most appealing to you (and tell exactly what fees/interest rate is involved). Then research whatever company offers the card to make sure they are legitimate. You may want to use Better Business Bureau to ensure that the company isn’t fake and doesn’t cheat its customers.

Hopefully you’ll be able to find a credit card with a decent interest rate by using the suggestions above. If not, you can always sign-up for the high interest rate card. Just be sure not to charge to much and to make payments on time.