As we all know, nursing one’s credit score back to health is a very challenging and seemingly impossible feat. With obstacles like rising gas prices and the demands of day-to-day necessities, it’s difficult to catch a break when trying to find ways to revive your credit. It may seem like every credit card company will immediately slam the door on a bad credit score, but gas credit cards in particular could be a great resource for those looking to rebuild their payment history while fulfilling a daily necessity.
One of the leading causes of bad credit is simply having poor spending habits. With a gas card, you can regulate your spending and practice better money management—you know exactly where your money goes since it’s only used on one expense. Also, consistent monthly payments can help build your reputation as a responsible cardholder, and put you back into good standing with financial institutions.
When searching for a gas card, a bad credit score could significantly limit one’s options. As expected, most cards you’ll be eligible for will carry an annual fee and a high APR, but just because you have bad credit doesn’t mean you should be paying anything completely unreasonable. Here are a few things to look out for when finding the right gas card for your credit.
Do Your Homework
First, get a copy of your credit report and look over it for any errors. Being familiar with your credit score can help you locate yourself and narrow down your card options. The more information you know about your credit score and history, the easier it will be to research gas cards on comparison websites. Once you’ve found a couple options, there are some very important details to be mindful of.
First, check the annual percentage rate (APR) on the card. This is especially important because a high interest rate could determine whether or not a gas card is actually beneficial to your credit score.
Next, check to see what fees each card carries, including annual fees, set up fees, and monthly service fees. It’s unlikely you’ll find a credit card for bad credit out there without an annual fee, but your savings on gas could balance it out, assuming it isn’t anything excessive. Also, over limit or late fees can leave you with an unexpected and overwhelming balance at the end of the month, so make sure to be aware of their policies. See if they offer a grace period for payments to make sure you always pay on time.
Even though you have bad credit, you still have the right to some flexibility in your gas card. Find out if there’s a credit limit or balance limit on the card. Gas prices seem to be increasing by the minute, so a really low limit could leave you stranded at the pump. But having a limit on your gas budget could also encourage you to be more careful about how you use your gas. Walking or biking to the store instead of driving can make for a healthy body and a healthy credit score.
Tim Chen is the CEO of NerdWallet, a credit card website helping you find the best gas credit cards for the summer driving season.