{"id":3584,"date":"2021-04-27T20:23:07","date_gmt":"2021-04-28T03:23:07","guid":{"rendered":"https:\/\/www.cashry.com\/blog\/?p=3584"},"modified":"2023-04-25T04:45:17","modified_gmt":"2023-04-25T11:45:17","slug":"credit-cards-after-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.cashry.com\/blog\/credit-cards-after-bankruptcy\/","title":{"rendered":"Can You Get Credit Cards after Bankruptcy?"},"content":{"rendered":"<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2021\/05\/can-you-get-credit-cards-after-bankruptcy.jpeg\" alt=\"\" class=\"wp-image-3601\"\/><\/figure>\n<\/div>\n\n\n<p>It\u2019s been a long, dark, weird, discouraging time. You\u2019ve tried to be responsible and follow the rules, but you\u2019re tired of all the limitations \u2013 even if they\u2019re supposedly for your own good. It feels like things will never get back to \u201cnormal,\u201d whatever that was. Maybe they shouldn\u2019t. Maybe that\u2019s the whole point. Surely there are a few important things you should try to start doing differently, even after the worst of it has passed?<\/p>\n\n\n\n<p><em>Bet you thought I was talking about 2020, didn\u2019t you?<\/em> Fair guess, but if that were true, I\u2019d have thrown in a snarky reference or two about \u201cmurder hornets\u201d or \u201cTiger King.\u201d What I had in mind this time around, however, was <a href=\"https:\/\/www.cashry.com\/blog\/how-to-file-for-bankruptcy\/\">personal bankruptcy.<\/a> <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Personal Bankruptcy<\/h2>\n\n\n\n<p>Few things can make us feel like complete and utter failures like enduring Chapter 7 or Chapter 13 bankruptcy. <\/p>\n\n\n\n<p>We\u2019re broken \u2013 both figuratively and financially \u2013 and there\u2019s all that paperwork and those court mandated classes (counseling sessions is more like it)\u2026 not to mention being pretty sure strangers in the street are looking at us thinking, \u201c<em>That one looks like they haven\u2019t been paying their bills on time lately.<\/em>\u201d<\/p>\n\n\n\n<p>The thing is, bankruptcy isn\u2019t about you being a monumental failure. <strong>Personal bankruptcy is the civilized, legal, responsible way for good people to confront, manage, and move past financial disaster<\/strong>. <\/p>\n\n\n\n<p>Are there lessons to be learned from it? Choices we could made differently or should handle better next time? Maybe so \u2013 that\u2019s how personal growth works, after all. But bankruptcy is not a prison sentence or eternal damnation, at least not in the modern world. It\u2019s a big deal, and a huge pain to manage, but the goal is to do right by as many of your creditors as possible and then move forward.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2020\/01\/1550678439-282x300.jpg\" alt=\"Bankruptcy chapter 7 vs chapter 13\" class=\"wp-image-1595\" width=\"299\" height=\"318\"\/><\/figure>\n<\/div>\n\n\n<h3 class=\"wp-block-heading\">Moving Forward After a Bankruptcy<\/h3>\n\n\n\n<p>Important word, that one \u2013 \u201cforward.\u201d You\u2019re no good to anyone sitting alone in the dark feeling useless and poor. At some point, doing right by those around you means learning whatever lessons there are to be learned, then making like vintage Taylor Swift and shaking it off. Haters gonna hate, hate, hate, hate, hate, and the fakers gonna fake, fake, fake, fake, fake. You need to suck it up, up, up, up, up and figure out how to rebuild and get back to being a self-sufficient and semi-productive member of society.<\/p>\n\n\n\n<p>There are a number of things you\u2019ll want to consider as you begin this new and improved you. Somewhere on that list is re-establishing a little credit for yourself and deciding whether or not you\u2019re going to carry a credit card or two moving forward. That\u2019s what we\u2019re going to focus on today.<\/p>\n\n\n\n<div style=\"height:27px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"cashr-content_3 cashr-entity-placement\" id=\"cashr-2705455031\"><div id=\"cashr-1280619175\" style=\"margin-left: auto;margin-right: auto;text-align: center;\"><div> <script type=\"text\/javascript\" src=\"https:\/\/embed.hifiona.com\/script\/helper\/bundle.js\"><\/script> <iframe class=\"even-iframe\" id=\"iFrameResizer0\" scrolling=\"no\" src=\"https:\/\/embed.hifiona.com\/ui\/multi-product\/index.html?partner=loanry-savings-embed&access_token=8cd4ed8e-100a-4353-8752-57dcb4430372_4802f2cd-0b4e-4623-b23a-3fc23a7f178b&company_uuid=1c4e72b3-5950-449c-8ae5-a59c67bbda70&productType=savings&pw_fiona=true&available_products=deposits&tag.subid=4ESRW3\" style=\"width: 100%; border: none;\"><\/iframe> <\/div><\/div><\/div><h2 class=\"wp-block-heading\">Credit Cards After Bankruptcy<\/h2>\n\n\n\n<p>It almost seems counterintuitive, doesn\u2019t it? Having just overcome unmanageable debt, why would you want to start the cycle again by taking out new credit cards?<\/p>\n\n\n\n<p>Those two things aren\u2019t necessarily the same, however. It\u2019s imperative that you NOT resume bad habits as you rebuild your credit and your financial world. If that means no credit cards for you, then stick to that. It\u2019s not easy to navigate the 21<sup>st<\/sup> century without any plastic in your wallet at all, but it\u2019s possible. Don\u2019t use credit cards to make purchases you simply can\u2019t afford. <strong>Use them to make purchasing more convenient and paying for things more flexible<\/strong>.<\/p>\n\n\n\n<p>In my personal view, there\u2019s almost never a good reason to take out cash on your credit card. A credit card advance of that sort comes with all sorts of fees and the interest rates tend to be outrageous. There may be situations in which it\u2019s your least horrible option, but I can\u2019t think of any at the moment. I\u2019d probably try selling the fillings out of my teeth or laying out a hat and doing mime in the park before I\u2019d take out a cash credit card advance.<\/p>\n\n\n\n<p><em>But that\u2019s just me.<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Why Would I Consider Credit Cards After Bankruptcy?<\/h3>\n\n\n\n<p>There are several good reasons to consider limited, responsible credit card use even after a bankruptcy, however.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">1. Responsible card use helps rebuild your credit score<\/h4>\n\n\n\n<p><a href=\"https:\/\/www.cashry.com\/blog\/how-to-use-credit-card-responsibly\/\">Responsible credit card use<\/a> helps rebuild your credit score and a positive credit history. <strong>Keeping your balance manageably low and making payments on time establishes immediate credibility which only strengthens over time<\/strong>. Most credits score models weigh recent behavior more heavily than past behavior, so responsible use of credit gives those models something fresher and happier to plug in to their algorithms and magical prediction games. <\/p>\n\n\n\n<p>Chances are that eventually you\u2019re going to want to finance a vehicle or purchase a home, and your credit score can dramatically impact both how many options you have and how much that financing will cost you.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">2. Credit cards can be a financial pit<\/h4>\n\n\n\n<p>Credit cards can be a financial pit, but <strong>used properly they are a modern financial convenience right up there with being able to check your balances, manage your investments, or set up payment notifications on your phone<\/strong>. Getting a credit card after bankruptcy mean you can make purchases online, pay for out-of-town travel, lodging, and meals, or handle unexpected opportunities or emergencies with grace and style. \u201cOMG, Aniaya \u2013 is that YOU? I\u2019d love to grab lunch with you and catch up! Let me just walk eleven blocks to an ATM and I\u2019ll be back in about an hour and a half if you\u2019re still here.\u201d<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">3. The right card can be a safe way to practice new budgeting habits<\/h4>\n\n\n\n<p>The right card and a modest balance can be a relatively safe way to begin practicing those new budgeting habits and that financial organization you\u2019ve probably sworn (a few thousand times) that you\u2019ll be doing from now on. <\/p>\n\n\n\n<p>Whether you\u2019re budgeting with an old-fashioned spreadsheet or using one of our freshly re-imagined financial apps to keep track of spending and manage your accounts as easily as you can watch yet another annoying teen dance video, it\u2019s all about establishing new patterns and new norms.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Dave Ramsey Budgeting Tips to Save On Every Dollar\" width=\"1140\" height=\"641\" src=\"https:\/\/www.youtube.com\/embed\/dAs8xsyjz6A?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Why Would Lenders Offer Credit Cards After Bankruptcy?<\/h3>\n\n\n\n<p>Great question. You have to remember that while credit card companies are happy to issue cards to folks who have excellent credit and pay their balances in full every month and never drop spare change into the couch cushions and probably make their own artisanal cheeses at home with their brilliant, emotionally stable children each week, that\u2019s not where they make their real money. Card companies want customers who pay regularly enough that they don\u2019t have to chase them down, but who are just messy enough that they can make some interest along the way \u2013 and maybe a few late fees here and there.<\/p>\n\n\n\n<p>That doesn\u2019t mean they\u2019re evil or dishonest or anything else. It means they\u2019re in business. For what it\u2019s worth, Wal-Mart and Amazon and that hidden gem of a caf\u00e9 down the street all want to make money, too. So do you, presumably \u2013 that\u2019s why you go to work every day and why bankruptcy was so painful.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Different but limited options<\/h4>\n\n\n\n<p>As a recent bankruptcy, your options will be somewhat limited at first. On the other hand, for companies which specialize in such things, you\u2019re an ideal candidate for the right credit card after bankruptcy. Why?<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>You <a href=\"https:\/\/www.cashry.com\/blog\/how-often-can-you-file-for-bankruptcy\/\">can\u2019t legally declare bankruptcy again for several years<\/a>. You\u2019ll have to pay what you owe.<\/li>\n\n\n\n<li>Much of your debt has recently been eliminated; you probably have more discretionary funds to spend each month now than you\u2019ve had in years.<\/li>\n\n\n\n<li>You\u2019re probably wanting to rebuild your credit score, establish a positive credit history, and begin nudging up some credit limits for future needs. That means you\u2019re likely to be particularly careful about making payments and staying within your limits \u2013 at least for the foreseeable future.<\/li>\n\n\n\n<li>Because you\u2019ve just been through a bankruptcy, card companies know you have fewer options than someone with excellent credit. Supply and demand \u2013 fewer lenders willing to take a risk on you means those that do can charge you a higher interest rate.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">What Kinds of Credit Cards After Bankruptcy Should I Consider?<\/h2>\n\n\n\n<p>Your options may be<strong> limited<\/strong> for the first few years, but that\u2019s OK. It usually takes a long time to end up in unmanageable debt; it makes sense that it would take awhile to rebuild your credit afterwards. But you know what they say about the journey of a thousand miles: wear good shoes. Or, wait \u2013 it begins with a single step. <\/p>\n\n\n\n<p>In my defense, either of those makes for pretty good advice.<\/p>\n\n\n\n<p>You usually have <strong>at least a few options.<\/strong> Even within these general categories, it\u2019s worth shopping around. Not all cards are the same, whether you have amazing credit or you\u2019re just recovering from bankruptcy. Take a little time to compare your options. <\/p>\n\n\n\n<p>The only remaining question you should ask yourself is should you go with a secured credit card or an unsecured one?<\/p>\n\n\n\n<h3 style=\"padding:15px; background-color:rgba(237,189,202,0.6);\">1. The Secured Credit Card<\/h3>\n\n\n\n<p>Most of the time, your best starting point is a secured credit card. You\u2019ve probably heard of these, even if you haven\u2019t used one yourself, but you may not know exactly how they work or why you might want one. Secured credit cards are designed for folks without much of a credit history one way or the other (often these are young people who\u2019ve just moved away from home or perhaps gone off to college), or who need to rebuild particularly bad credit \u2013 say, if they\u2019ve recently gone through personal bankruptcy.<\/p>\n\n\n\n<p>A secured credit card <strong>requires you to make an initial deposit with the credit card company issuing you the card<\/strong>. This is \u201ccollateral\u201d in its most basic form \u2013 cash they have which belongs to you but they keep until you ask for it back. In exchange, you\u2019re issued a credit card with a credit limit equal to the amount of the deposit (or perhaps a bit higher, depending on the company and your exact circumstances). You can now use that card just like any other credit card.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><em>Interest rates<\/em><\/h4>\n\n\n\n<p>Interest rates on a secured credit card may not be amazing, but they\u2019re kept in check by the fact that your creditor is operating with minimal risk. Don\u2019t be surprised if the rates you\u2019re offered are still higher than what others are getting for unsecured cards, at least at first. <strong>Higher interest rates don\u2019t mean they\u2019ll all be the same, however<\/strong>. <\/p>\n\n\n\n<p>It\u2019s easy during a grueling process like bankruptcy to forget that once you emerge on the other side, you\u2019re the customer again. You\u2019ve \u201cserved your time.\u201d You\u2019ve \u201cpaid your dues\u201d \u2013 perhaps literally. You should be prepared to confront <strong>more fees and higher interest for a while<\/strong>. But that doesn\u2019t mean you have to humbly accept the first thing you\u2019re offered or that you don\u2019t deserve anything better. Let\u2019s get out of that \u201cthank you sir, may I have another?\u201d mindset right now, before you even begin shopping for credit cards after bankruptcy.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><em>Monthly payments<\/em><\/h4>\n\n\n\n<p>You make monthly payments just like any other credit card, paying down your balance and freeing up those funds to be spent again if you so choose. <strong>Your initial deposit isn\u2019t impacted one way or the other unless you miss a payment<\/strong>. In that case, the lender may withdraw the missing amount from your deposit, along with whatever late fees or other charges have incurred. Under most arrangements, you can withdraw your deposit any time and cancel the card as long as you\u2019re paid in full.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><em>What about a checking account?<\/em><\/h4>\n\n\n\n<p>Now hang on, you may be thinking \u2013 this sounds like I\u2019m paying someone else interest to use my own money. Why not just open a checking account and get a debit card tied to it? You\u2019re right, and you can absolutely do that if you wish. (Actually, you should probably have a debit card tied to your checking account whether you end up with a secured credit card or not.) The secured credit card is a means to an end. <strong>Your bank doesn\u2019t normally report your checking or debit transactions to the major credit bureaus<\/strong>. Why would they? You\u2019re not using credit, just spending your own money. Secured credit card companies, on the other hand, treat your payment history just like they would with a regular unsecured card. Your secured credit card impacts your credit history starting on day one, for better or worse.<\/p>\n\n\n\n<p>Some secured cards offer perks comparable to regular credit cards. And most provide the same sort of security as major credit cards against fraud or loss. If you establish a good history with a specific card company, chances are good they\u2019ll eventually offer you a credit limit above your actual deposit, and may eventually approach you about switching to a standard, unsecured credit card. Plus, you\u2019ll be establishing good budgeting and <a href=\"https:\/\/www.aba.com\/advocacy\/community-programs\/consumer-resources\/manage-your-money\/7-tips-for-good-saving-habits\" target=\"_blank\" rel=\"noreferrer noopener\">money management habits<\/a> along the way with relatively little risk. In short, a secured card is a staggered stone path to better things.<\/p>\n\n\n\n<h3 style=\"padding:15px; background-color:rgba(237,189,202,0.6);\">2. Unsecured Credit Card<\/h3>\n\n\n\n<p>If you don\u2019t love the idea of a secured credit card, or you don\u2019t have the resources to make that initial deposit, there are options for traditional, unsecured cards out there. If you\u2019re going through bankruptcy right now, or finished the process recently, you may even have noticed a sudden flood of offers coming in the mail, your email, or showing up in ads pretty much everywhere you go online. (Yeah, it\u2019s creepy and annoying, I know \u2013 but that\u2019s a whole other topic for another time.)<\/p>\n\n\n\n<p>If you decide to go this route, recognize that <strong>the interest rates you\u2019ll be offered will be noticeably higher than market average at the moment<\/strong>, often by as much as 5%. Initial credit limits will be low. And there may be additional upfront fees and particularly punitive late fees or other charges. You may not be able to get premium terms at this point, but I want to emphasize again that you are not at the mercy of the lenders with the biggest advertising budget. You are still the customer, and it\u2019s up to you what you\u2019re willing to accept, or not. <\/p>\n\n\n\n<p>If you don\u2019t like any of the offers, don\u2019t take them. You\u2019ll figure out something else. And you don\u2019t have to be passive. Don\u2019t wait for the offers to come to you \u2013 do some digging, some comparisons, some pros and cons lists.<\/p>\n\n\n\n<h3 style=\"padding: 15px; background-color:rgba(237,189,202,0.6);\">3. Use Someone Else\u2019s Cards<\/h3>\n\n\n\n<p>OK, I\u2019ll admit it \u2013 I phrased it that way just to make sure you were still paying attention. I\u2019m not suggesting that you steal someone\u2019s credit cards. That would be wrong. And illegal. Plus, it\u2019s so easy for folks to lock that mess down with a single swipe of the app that it would be pointless even if it weren\u2019t illegal and wrong. Which it is.<\/p>\n\n\n\n<p><strong>But if you have a family member with good credit and who\u2019s willing to help you out a bit, consider asking them to add you to their existing credit cards<\/strong>. Purchases and payments with those cards will reflect on both of your credit records, so be very clear in advance about what is and isn\u2019t acceptable to both of you. This can be a great way for young people to build credit, however. And a solid part of rebuilding credit for users of any age.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.loanry.com\/blog\/asking-friends-and-family-for-money\/\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" width=\"1634\" height=\"469\" src=\"https:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2021\/04\/Screen-Shot-2021-04-28-at-12.04.40-PM.png\" alt=\"\" class=\"wp-image-3596\"\/><\/a><\/figure>\n<\/div>\n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>Take a breath. Don\u2019t sign anything until you\u2019ve processed it with a clear mind and low blood pressure. The road back won\u2019t always be easy, but you\u2019ve probably been through the worst of it already, and here you are looking good and pushing forward. <\/p>\n\n\n\n<p>If we can help you compare your credit card options or navigate through any other financial questions, let us know. Otherwise, we\u2019ll be here when you need anything.<\/p>\n<\/div><\/div>\n\n\n\n<p><em>Seriously. You got this. You survived personal bankruptcy AND 2020. What could possibly stop you now?<\/em><\/p>\n<a class=\"arb-banner\" href=\"https:\/\/mall.goalry.com\/cashry\/?utm_campaign=organic&utm_source=cashry&utm_medium=loanscategory&utm_content=banner\"><img decoding=\"async\" class=\"arb-banner-img\" src=\"https:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2022\/02\/cashry-banner.jpg\" alt=\"cashry\"><\/a><!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>It\u2019s been a long, dark, weird, discouraging time. You\u2019ve tried to be responsible and follow the rules, but you\u2019re tired of all the limitations \u2013 even if they\u2019re supposedly for your own good. It feels like things will never get back to \u201cnormal,\u201d whatever that was. Maybe they shouldn\u2019t. Maybe that\u2019s the whole point. Surely [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":20,"featured_media":3603,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_eb_attr":"","footnotes":""},"categories":[120],"tags":[189,213],"class_list":["post-3584","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loans","tag-credit-cards","tag-personal-credit-cards"],"acf":[],"featured_image_src":"https:\/\/www.cashry.com\/blog\/wp-content\/uploads\/2021\/04\/can-you-get-credit-cards-after-bankruptcy_2.jpeg","author_info":{"display_name":"Blaine Koehn","author_link":"https:\/\/www.cashry.com\/blog\/author\/blaine-koehn\/"},"_links":{"self":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts\/3584","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/comments?post=3584"}],"version-history":[{"count":5,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts\/3584\/revisions"}],"predecessor-version":[{"id":6067,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/posts\/3584\/revisions\/6067"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/media\/3603"}],"wp:attachment":[{"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/media?parent=3584"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/categories?post=3584"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cashry.com\/blog\/wp-json\/wp\/v2\/tags?post=3584"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}