Bad credit bank products and services are meant for all those who do not have favorable credit history or high credit scores. Although these products and services are offered at high prices but these are helpful in managing the debts in a planned manner.
There are a number of people who are having bad credit reports and low credit scores. Generally these people are not provided with any traditional financial product. However, there is a wide range of products that are developed for bad credit holders only. There are bad credit bank accounts, credit cards, debit cards, bad credit bank loans, bad credit private loans and so on.
Bad Credit Bank Products
Individuals with bad credit history are not denied totally by the banks. There are a number of bad credit bank products that are offered to these customers. Some of these products are as follows:
- Credit Cards: Bad credit customers are generally provided with three types of credit cards. These are the secured cards, prepaid cards and unsecured cards. These cards have different interest rates and annual fees. These are mostly offered to customers with credit score less than 550. Once the credit score of the customer improves, the rates also improve.
- Bad Credit Debit Cards: To avail these facilities, the customer should have an account in the same bank that is providing the card. The customer deposits a certain amount in that account and then, whatever the customer spends through the card, is deducted from that account.
- Bad Credit Bank Accounts: There are several banks that offer savings account services to the individuals with bad credit history. The customers save money in these accounts that is generally used for debt clearance.
Common Features of Bad Credit Bank Accounts, Loans and Cards
There are several features that are common for all the bad credit bank products. The interest rates that are applied on these products are almost two times of what they normally cost. At the same time, there are certain products where an annual fee is applicable. This fee is also higher for all those customers who have bad credit history. Again the loans that are provided to these customers are designed with short tenures.
There are certain reasons behind these features. Firstly, these financial products are provided to those persons who have bad reputation about paying back their debts. Again there are certain clients who have hardly any property to place as collateral. Because of all these, the bank that is providing these services is exposed to maximum risk. These risks should be covered and this is done through the higher rates of interest.