A couple of months ago, I was at a conference where I met someone who finds auto loans or autos (rather) for people who have poor credit. I was told that there aren’t many firms willing to provie auto loans to people with bad credit. There are also just one or two auto companies that will extend credit to those with bad credit. Then she ended a conversation with these remark. s “If you have bad credit, you just have to take what is given to you! I once had bad credit myself!”. This leads me to todays post about bad credit card application fees.

If you have bad credit and need a credit card, there are issuers who are willing to issue credit cards to you. But these cards will have more fees than regular credit cards. These are the fees you have to be aware of.

Annual Fees - while most regular unsecured credit cards (except some rewards, airline or prestige credit cards) have no annual fee, almost all bad credit cards have annual fees that can go as high as $150 (ouch).

One time application fees - On top of high annual fees, many of these cards charge a one-time application fee that can go as high as $60.00! Worse of all, some have both a one-time application fee and a one-time processing fee!

Monthly Maintenance Fee - On top of annual fee, many cards also a montly maintenance fee! This is usually $6.00 a month, which works out to $72.00 a year.

High APR - Well, if you do not have good credit, do not expect to get low interest rates. Rate of 19% or higher are not uncommon at all.

While many of you may wince and think that credit card issuers are ripping people off, the truth is that these issuers are taking more risk on people with bad credit than regular folks with good credit. Secondly, because the major banks do not generally approve cards for people with bad credit, the subprime market is really left to smaller boutique credit card issuers. These issuers normally do not have their own bank. Hence, they outsource the issuance and operations to credit card processing companies and banks who are willing to issue on their behalf. That is another reason why many bad credit cards have these fees.

But the biggest issue really isn’t about just the fees. It is that the fees are applied to everyone who fall within the “subprime” category. Most banks consider a score below 620 as subprime (”bad credit’). However, someone with a 615 score is better than someone with a 515 score. But unlike regular credit cards, most bad credit cards treat these two applicants the same in terms of fees charged and interest rates. The only card that varies the fees that they charge is the Orchard Bank Mastercard, where you will either be approved for their platinum, gold, silver or secured versions.

Below is a table highlighting all the fees of major bad credit cards. This will hopefully help you make a better informed choice if you have bad credit and need a credit card.

Bad Credit Card Application Fee Comparison

Tribute Mastercard
Application Fee - $29.00
Processing Fee - n.a.
Annual Fee - $150
Monthly Mainenance Fee - $6.50/mth
APR - P+11.25%

First Premier
Application Fee - $95.00
Processing Fee - $29.00
Annual Fee - $48.00
Monthly Maintenance Fee - $6.00/mth
APR - 9.90%

Imagine Mastercard