There is a popular misconception concerning low limit credit cards helping to improve credit? That is actually not a true statement at all. Lower limit credit cards are usually only sent to those who have or have had bad credit. When one thinks about those who have bad credit, they are usually thinking of those in the lower income level. Also, those who are down right poor will receive an offer like this in the mail. That is because the credit card companies know that those who are poor are always in need. Those with bad credit are always in need. If not, their credit would be good.
First of all, these cards always come with a catch. They indicate that one is rebuilding their credit, but the catch is that they are going to charge a yearly fee just to have this card. Some have a one time fee of $75.00 for different reasons. They say for paper work, etc. But the point is that you will start out in debt before even using this card. Most of the low limit cards are only $300.00 to began with, so if you start out with a $75.00 yearly fee and $5.99 ins. , that will only leave you with around $220.00 and a payment for not even using the card yet.
The large companies target the middle to low income people because they know they need money. They also know that unfortunately people will grasp anything when they are in need. It doesn’t matter how much they have to pay back. If a person needs money for food and it is offered they are going to take it. It will definitely not improve credit, it will only create more credit.
Most of the people in this world who cannot afford a credit card are the very ones that the credit card companies will target. They do not care who is in debt. Their goal is to sale the idea that one could actually rebuild their credit with a new credit card.
Lets look at the facts. If one has already ruined their credit, you might wonder why they would want to get another. There are people in debt that can barely pay their monthly bills, but let them get one of those cards and they think they have gotten something great. It can take less than 5 minutes to wipe that card out. Then that person has another monthly payment to add to all the rest. So they are not building their credit, only adding to their bills which is setting them up to ruin what credit, if any, has already been established.
All of the credit card companies use these tactics to trap the poor person in this vicious cycle. That person is grasping for anything to stay afloat while the credit card companies just care about numbers. One more card is just what that person does not need. Especially one that starts a person out in debt leaving them with another monthly payment with nothing to show for it.
If the companies would offer a low limit card without beginning debt with that card, it would not do as much harm. We have all seen them. Especially those who have been in debt. A card comes in the mail. Offers a certain amount. The problem is there is a beginning fee, a yearly fee, and a monthly maintenance fee. So if a person is offered $300.00, after these fees have been taken out, they are lucky if they have $125.00 left on that card. It is a rip off from the very beginning. But again, think about that person that has no food, and they see $125.00. Some cards do not even start out with that much left on them. This is something that needs to be banned by law to protect those who are already suffering from lack.
In summing this all up; the companies that do this should check the yearly income for the applicant. Most of the time the numbers that are put down on the application are not the true figures. Secondly; if that person has bad credit to begin with, do not put even more debt into their hands. It is too tempting and they know that already. It does nothing to improve credit whatsoever. This is a practice to get customers. That is the goal.
The last thing to point out here is that a lot of people will feel that one should just be strong and throw that offer away. And that is very true. Unless one has never been without and in dire need, they will never understand why that person can not pass up that offer.