Expert Q&A

A 29.99% card APR is too high, even with bad credit


Spurn that really bad offer, try these other credit-building methods first

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Question for the expert

Dear Credit Wise,
I just got a letter in the mail for a MasterCard, but the APR is 29.99 percent. I know that is too high, but my credit is bad. I’m trying to build my credit back up so I’m also trying to get some advice. Is that good or bad? — Vera


Answer for the expert

Dear Vera,
It is an unfortunate truth that one can very quickly do major damage to one’s credit score. However, the reverse is true when trying to build credit back up. It takes time and all too often it feels like you just don’t have that time. I know it is tempting for you to take this offer since you are in the process of building your credit. However, you are correct in your statement that 29.99 percent is too high — it’s way too high. It’s like being stuck between a rock and a hard place trying to figure out what to do.

The only circumstance in which I would be comfortable with you accepting this card would be if you used it sparingly and paid the balance in full each month. This is risky, though. You could be more inclined to buy something that you otherwise would not, if you didn’t have the credit available.

My advice is to hold off on accepting this offer. There are far better options for establishing credit than taking on a card with an onerous rate. One of those options might be a very modest loan with a bank or credit union. These loans are usually for relatively small amounts, and competitive rates are offered by many small banks and credit unions. This is a great way to establish a different type of credit, which is good for your credit score.

If you don’t believe you can qualify for a small loan, you could also look into a secured credit card. A secured card is backed by your own money rather than your credit history, which makes it easier to qualify. This does not mean that you won’t pay fees and interest with a secured card, because you will. I don’t believe you will be paying 29.99 percent, though.

Never forget, though, that your goal must be to pay the debt in full each month so the interest rate is a nonfactor, regardless of what card you ultimately obtain. If, as a last resort, you must use the card and know you cannot pay it off in full the following month, look for the lowest interest rate you can get.

Shop around to find a card that offers you a better rate and also be sure that any card you ultimately choose will be reporting to the credit bureaus. Once you have found the right card, you will want to use your card responsibly. Keep your credit utilization as low as possible — shoot for less than 20 percent of your spending limit. Use your card periodically and pay off your balance each month. Establish a method for paying your bill on time and in full every month. This is the single most important thing for you — or for anyone — to do when trying to improve a credit score.

This is true for all of your bills. Your mortgage company or landlord very likely report to the credit bureaus, as do some utility companies, so you want to make sure those bills are paid promptly as well. You must pay all your bills, on time, all the time. This will, over a period of time, slowly improve your credit score. You will also be in much better shape overall financially.

Be wise with your credit!

See related: Rebuilding credit in 5 (slow) steps


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