Credit cards for poor credit

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Recently we were asked the question "Are there any credit cards that are easier to be accepted for?" The person asking the question had really bad credit rating and desperately needed a credit card to pay bills and buy food as he had just lost his job and his benefits were yet to be sorted out.

We thought we would post our response here since quite a few of our users are in that situation.


Our Response:
There are a couple of credit cards that are meant for people with poor credit. A big warning is you will have to pay extremely high interest rates and we would not recommend you to use them longer term. The interest rates range from 30%-50% APR, so for every £100 you will owe -£130 to £150 over the course of the year assuming you pay it off within a year and don't miss minimum payments.

Some credit cards you can research further:

• Barclaycard Initial Card - Typical APR 27.9% (meaning 2/3rd people get this rate- yours might be higher or lower)
• Capital One Classic Card - Typical APR 34.9%
• Aqua Card - Typical APR 35.9%
  
• The Vanquis Card - Typical APR 39.9%

The Vanquis card might be the easiest one to get in your situation as they do provide cards to people with poor credit, CCJ's but has the highest interest rate; so maybe you can start applying with the Barclaycard or Capital One, then Aqua or Vanquis if you get rejected for the other. (most card companies have instant decisions as long as they can verify your information)

Please use our calculators to compare and analyze interest costs on these credit cards.

For example if you spend £300/month on the card and repay £50/month over a year you will be charged £616 in interest on the Vanquis Card. So make sure you really need this credit card!

We will be analyzing the Aqua Card soon and adding that to our comparison tables, till then look up the information on the Aqua Credit Card from our partner below:

Aqua credit card voucher codes
eComparison.co.uk combines comparison, cashback, voucher codes and reviews in one place on over 3,000 of the UK`s leading brands.

Uk Government to announce new proposals for the credit card industry

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The UK government is expected to publish a white paper tomorrow outlining proposed new rules for the credit card industry. The Observer reports one of the proposed rules will outlaw unsolicited credit card cheques in the UK. The report cites that £500 credit card cheque can carry an additional £150 in charges if the repayment is staggered over the course of a year.

The white paper is also said to contain plans to limit the maximum APR's which have continued to increase despite BOE holding base rates at 0.5% for some time. This will help most consumers and hopefully result in more low APR credit cards being available.

This move couldn't come sooner for some consumers that are struggling with credit card debt as interest rates increase. Personal debt levels in the UK are approaching £1.5 trillion, according to charity Credit Action. This equates to around £60,000 per UK household. This move by the UK government follows similar recent actions by the US government.

This move is likely to re-raise the debate on should the government impose limits on APR rates or should it leave it to the free market to determine the interest rates. Take our poll and voice your opinion.

Barclaycard cuts minimum repayment on credit cards

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Barclaycard extended to some of its customers a lower minimum repayment - 1.5% Vs. the prior 2.25% of the remaining balance. This will give some of its customers additional flexibility in these tough economic times. A Barclaycard spokesman said: "We are doing this to help customers. This is an option we are giving to selected customers for them to be able to make a reduced minimum repayment for a limited period if the customer chooses to do so. We understand that some customers may appreciate this additional flexibility during the current economic circumstances."

While this may help these customers in the short term or those having 0% deals, lower minimum repayments are the way credit card companies build up interest charges and keep customers in debt longer. We advise Barclaycard customers to only make these minimum repayments if they absolutely cannot afford to make higher payments. As far as possible customers should avoid making minimum repayment.

• At a minimum repayment of 1.5% if your credit card interest rate is higher than 19.6%(apr) the repayments do not even cover the monthly interest carges on the credit card, which means the credit card balance keeps increasing without any additional charges on the card.
• A cardholder with £5,000 at an interest rate of 15.9 per cent, making the current minimum repayment, will take 31 years to repay the debt with interest charges of £5,900.

Use our interest charge calculators to understand the cost of making a minimum repayment.

Virgin Money sees 25% jump on leisure, going out spending

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Virgin Money released data from its recently conducted study that showed some more signs of green shoots in the economy. Spending in bars, restaurants, cinemas and theatres increased to £20 million in Q1 2009 compared to Q1 2008. This was based on analysis of 2008 & 2009 spending on Virgin Money credit card, UK's fastest growing credit card with more than a million customers.

March saw the biggest jump of 55% in this spending category showing signs that confidence is returning on the High Street. A late Easter may have also led to this boost, but this is just one more evidence of an economic green shoot. This trend has continued into April which saw a 26% increase. This increase in entertainment and leisure which is a definitely a sign of a return of confidence and reverses the trend of slowdown in spending on leisure as people tightened their belts and were less willing to spend unless it was on essentials.

I am now heading off to the pub to maintain this trend! Cheers!

Virgin Money Card offers 0% balance transfer rate for 16 months (fee of 2.98%) and 0% on purchases for 3 months. It has a typical APR of 16.6%. Compare the Virgin Money card with other credit cards.

UK DJ gang arrested for credit card fraud

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A 10 people UK gang, 7 men and 3 women which included a DJ, was arrested for allegedly using hundreds of stolen or cloned British and American credit cards to download £469,000 worth of their own music from iTunes and amazon.com

The gang had 19 songs legitimately uploaded to iTunes and amazon music stores via a promotions company Tunecore -a respected organisation that artists and musicians can simply pay in order to have their work added to popular online music download stores. Then for over 4 months from Sep 2008, this group downloaded £469,000 worth of their own music for which iTunes and Amazon doled out $300,000 in royalties. The sales allowed them to rise rapidly in the charts. The con was only spotted when credit card companies became suspicious over the transactions.

The suspects were arrested at addresses in London, Birmingham, Wolverhampton and Kent, according to the Times, and follows investigations made by the FBI and the Metropolitan Police.

Incidents like these highlight the risks of credit card fraud. Several credit cards provide free identity & fraud protection services we urge consumers to keep their credit cards safe. To compare credit cards with free fraud protection services click here.

See the guide below to keep your money safe
DirectGov: Keeping your money secure

Credit Card Interest Rates Creep Up to 18.1%

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Average credit card interest rate on purchases has crept up above 18% to 18.1% from 17.9% in May, according to financial information group Moneyfacts.co.uk. This has been caused by withdrawal of top deals and increase in rates on the new cards being offered. Most card providers have increased rates in the past 6 months even though BOE has lowered rates.

This increase will have an adverse impact on customers already struggling with repayments and credit card debt. This means consumers will have to look harder to find the right credit card deals in order to manage their finances in these tough times. Consumers need to take advantage of 0% Balance Transfer, and 0% purchase card deals to save and ride out the current credit crisis.

Use our calculators to compare and find the best credit card for you. Start Now!