Among the many different payment methods in today’s consumer-driven economy, credit reporting cards strike a very specific balance. Being the best option for people with bad credit, they also allow their cardholders to build and improve their creditworthiness with good behavior.
Here’s everything you need to know about this unique payment card:
Reporting Credit Cards: What Are They and What Are They Not?
Based on the overview of their main features, credit reporting cards could be placed somewhere in the middle between debit cards and credit cards. Like debit cards, they are often prepaid cards. But unlike them, they allow you to pay for goods and services with the card issuer’s money.
Card reporting credit are essentially credit cards, not debit cards.
Using the available funds on your reporting card, you can pay for either all or specific products and services. It all depends on which reporting card you’ve chosen. At the end of each month, you need to return the funds you’ve spent to your card issuer, plus extra expenses.
But the feature that separates credit reporting cards from all other payment methods is that they report back to the three main credit bureaus on a regular basis – more frequently than other credit cards. Thanks to this, their cardholders have an opportunity to fix their credit fast.
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Who Are Reporting Credit Credit Cards Intended For?
Cards reporting credit are designed for individuals who can’t qualify for any other type of credit card due to having a bad credit score, no credit history, or low to nonexistent income. Because of this, issuers of reporting credit cards don’t check their applicant’s credit and employment.
What Are Reporting Card Offers Aimed Towards?
The main purpose of reporting credit card offers is to help you boost your credit score.
However, this is not everything they can be aimed towards.
Some credit reporting cards also boast balance transfer features which allow you to pay off a debt you’ve accrued using another credit card, but with lower interest rates. Others are aimed specifically at frugal consumers. These so-called single-use shopping cards come with discounts.
Like many other types of credit cards, but unlike most payment options for people with bad credit, these credit cards often have rewards programs that you can use for collecting points which can be redeemed for certain goods and services, usually limited to one brand or merchant.
How Reporting Cards Affect Your Credit Score?
In order to determine whether or not you’re qualified for carrying a certain type of credit card, credit card issuers make “hard inquiries“, which means that they pull your credit report from one of the three main credit reporting bureaus in the US – Experian, Equifax, or TransUnion.
In exchange for this report, issuers will send your current cardholder data – your history of payments, whether or not you carry any debt, and other similar information back to these reporting bureaus, thus helping them update and recalculate your overall credit score.
If you’re in a hurry to fix your credit, you’ll want this to happen as frequently as possible.
Reporting credit card offers are so convenient for people with bad credit exactly because they report to the three credit bureaus more often than other types of credit cards. Presuming you’re using your reporting card responsibly, it should be able to help you boost your credit faster.
The Main Types of Reporting Cards?
There are two main types of reporting credit cards:
- 1. Secured, which require a safety deposit as collateral, and
- 2. Unsecured, which are no-collateral, instant-approval cards.
Credit cards reporting credit can also be single-use-shopping cards, making your purchasing choices limited to a certain brand or merchant. These limited-use reporting cards can usually be used in shopping malls, wholesale stores, and eCommerce websites, but also in gas stations.
What Are the Main Uses of Reporting Card Offers?
Reporting credit can be used for more or less everything that other types of credit cards can be used for. Even though they are less versatile – we have only three main types of reporting cards. They boast a variety of features, perks, and benefits that make them consumer-friendly.
The most common uses of credit reporting cards are:
- Building and improving a damaged credit score.
- Transferring and paying off a balance from another card.
- Shopping for goods and services at discount prices.
- Collecting redeemable rewards points.
How Else Do Reporting Credit Cards Differ from Other Card Types?
Aside from being Instant Approval, reporting cards differ from other Traditional credit cards in that they sometimes require a safety deposit as a guarantee that you’ll be able to pay off everything you borrow from your card issuer. In that, they are like secured cards.
In terms of other expenses, they usually have higher interest rates than other cards.
When it comes to special perks and benefits, these cards don’t offer the same variety of rewards programs as other types of credit cards for above-average credit. Specifically, they rarely include travel discounts such as frequent flyer miles or points-for-cash features.
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What Are the Common Fees for Reporting Cards?
The common fees and expenses charged for owning a credit reporting card are:
- Account opening fee, which covers the expenses of processing your card application.
- Safety deposit, which serves as a guarantee that you’ll be able to pay off your debt.
- Account maintenance fee, which covers the expenses of servicing you as a cardholder.
- Interest fee, which can be fixed or variable and is charged when you carry a balance.
- Late payment fee, charged every time when you miss a deadline for making a payment.
- Balance transfer fee, which covers the expenses of transferring debt from another card.
Do Credit Reporting Cards Offer Any Perks and Rewards?
Some of the most frequent perks and rewards on reporting cedit cards offers include:
- Discount prices for specific products and/or certain brands.
- Rewards programs, mainly Points redeemable for certain products.
- Consumer protection, which covers free shipping and return policies.
What Is the Procedure of Getting a Credit Reporting Card?
If you’re interested in applying for a credit cards reporting credit, you can do so in a card issuer’s branch, via phone, or through an online form. With most cards reporting credit, you won’t need any proof of employment or financial stability, although some require a current checking account.
Like with other Traditional credit cards, you need to be at least 18 in some cases 21 years old to apply.
Since issuers of reporting cards don’t check your credit score and employment status, you shouldn’t wait for too long for your card application to be approved. The Instant Decision policy means that in most cases you don’t have any reason to worry about getting denied.
Credit Reporting Credit Cards Frequently Asked Questions
Credit reporting cards can be obtained by any interested individual, regardless of their credit score. Most credit card issuers won’t even do credit and employment checks in order to approve your application, which is why these cards are sometimes referred to as “guaranteed approval“.
If you’re interested in obtaining a credit reporting card, you can submit your application directly in a card issuer’s branch, via phone, or through an online form. Given that credit reporting cards are usually “guaranteed approval”, online applications are the easiest and fastest.
In the vast majority of cases, you don’t need to have any registered income in order to qualify for a credit reporting card. However, you should expect from your credit card issuer to demand a safety deposit as a guarantee that you’ll be able to pay back the money you charge.
Some credit reporting card issuers also require their applicants to have a checking account.
You should be very careful when choosing a credit reporting card provider. If the bank doesn’t sound familiar to you, make sure to conduct a thorough background check. Consult Google, but also independent online forums where cardholders share their experiences and opinions.
You probably wouldn’t be looking at credit reporting cards if your credit score was any higher. They are the best payment option for individuals with bad credit – like many credit cards for an above-average score, they offer features, perks, and rewards that can help you boost your credit.
Credit reporting cards are a special type of credit cards that are intended for people with a poor credit score. They differ from similar payment methods in that they frequently report cardholder behavior back to the three main credit bureaus – TransUnion, Experian, or Equifax, thus helping you build and improve your score.
Yes, credit reporting cards fall under the category of credit cards. Even though some issuers require you to pay a safety deposit in order to start using your credit reporting card, this payment method should not be confused for other popular prepaid options such as debit cards.
In order to choose the right reporting card for your needs, you should first define your financial goals, purchasing habits, and lifestyle choices. Then, you can use online credit card review websites to research your options and contrast and compare different credit reporting cards.