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Can I get a credit card after bankruptcy?

| Jan 26, 2021 | Consumer bankruptcy |

For many people, credit cards represent a temptation that is difficult to ignore. However, credit cards are very useful. You may wonder if after a bankruptcy you will be able to get a credit card.

It is likely that after declaring bankruptcy, getting a traditional credit card will be difficult. There are actually two different types of credit cards: secured and unsecured. While you may not be able to get an unsecured credit card after bankruptcy, according to NerdWallet, you will be eligible for secured credit cards and these can even help you rebuild your credit.

What is a secured credit card?

A secured credit card requires a deposit before use. If you put $500 on a secured credit card, that becomes the maximum limit of a credit card. The idea is that if you do not make your credit card payments, the company can then seize the deposit.

Secured credit cards are not the same as Visa gift cards, which are more like debit cards. A secured credit card operates like a regular credit card in that you can use it, pay it off, and use it again.

How does this help me improve my credit?

Secured credit cards report to the credit bureaus just like the unsecured ones do. After roughly a year of responsible secured credit card use, you may be able to graduate to a traditional unsecured credit card without a deposit. It is best credit score-wise if you choose a secured credit card that you can transfer into an unsecured one since you do not need to open a new line of credit if you do this.