Are you struggling with bad credit in the UK and finding it difficult to access credit cards? We understand that financial setbacks happen, but they shouldn't hold you back forever. Enter guaranteed credit cards for bad credit – a solution designed to help rebuild your credit while giving you the financial freedom you desire. In this Flik Eco guide, we'll take a detailed look at these cards, how they work, and their benefits. So sit back, relax, and let us help you take the first step towards building a healthier financial future.
Guaranteed Credit Cards For Bad Credit UK Table of Contents
What are Guaranteed Credit Cards?
Best Guaranteed Credit Cards for Bad Credit in the UK
What are Guaranteed Credit Cards?
Guaranteed credit cards, also known as secured credit cards, are designed for people with poor or no credit history. They often come with a lower credit limit and require a security deposit to get started. This deposit acts as collateral and determines your credit limit. The lender holds the deposit and returns it when you either upgrade to an unsecured card or close the account with no outstanding balance.
How Do They Work?
Here's how guaranteed credit cards work:
1. You apply for the card and pay the security deposit, usually between £200 to £2,000.
2. Your credit limit is set based on the security deposit (usually 90-100% of the deposit amount).
3. You use the card for purchases and make monthly payments, just like a regular credit card.
4. Your utilization and payment performance are reported to credit reference agencies (Experian, Equifax, and TransUnion), which helps build your credit score.
5. If you manage the card responsibly, over time, you may become eligible to upgrade to an unsecured card or receive a credit limit increase.
Best Guaranteed Credit Cards for Bad Credit in the UK
There are several guaranteed credit cards available in the UK market. Some of the top options include:
- Aqua Classic Card: Zero annual fee, representative APR of 37.9%, and initial credit limits between £250 and £1,200.
- Vanquis Bank Chrome Credit Card: A slightly lower representative APR of 29.5%, £250 to £1,000 starting credit limit, and no annual fee.
- Capital One Classic Platinum: Representative APR of 29.8%, initial credit limit from £200 to £1,500, and no annual fee.
When deciding on a card, consider factors like interest rates, credit limits, fees, and potential rewards.
Benefits of Guaranteed Credit Cards
Guaranteed credit cards may come with more restrictions and higher interest rates than regular cards, but they have undeniable benefits:
1. Build or rebuild your credit score: By consistently making on-time payments, you demonstrate responsible credit use, which, over time, will improve your credit score.
2. Easier approval: Guaranteed credit cards usually have more relaxed application criteria, making them accessible to individuals with bad credit or no credit history.
3. Access to credit: Even if you have bad credit, you can still enjoy the convenience of a credit card for emergencies, online shopping, or renting a car.
4. Upgrade potential: After demonstrating responsible card use, you may become eligible for an unsecured card or a higher credit limit.
Guaranteed Credit Cards For Bad Credit UK Example:
Suppose John has a poor credit history due to missed loan repayments. He wants to rebuild his credit and gain access to a credit card. John applies for a guaranteed credit card with a £300 security deposit, securing a £270 credit limit (90% of the deposit).
John uses the card for small monthly expenses like groceries and always pays off his balance in full and on time. After a year of responsible use, his credit score improves, and he receives an offer to upgrade to an unsecured card with a £1,000 credit limit. Upon accepting the offer, John gets his £300 security deposit back.
Now you know about guaranteed credit cards and how they can help you on your journey to rebuilding your credit in the UK. With responsible usage and timely payments, you'll be on your way to a better financial future. So, take that first step and consider applying for one of these cards today. And as always, share this Flik Eco guide with friends and family who may benefit from this information. Be sure to check out our other guides for additional tips and insights to help you make informed financial decisions.
