Instant approval credit cards guarantee the applicant of receiving a response within 60 seconds of submitting the online application form, provided the consumer or the business has an excellent credit rating. This statement almost negates their viability, however, given that credit cards can be both secured and unsecured, instant approval for secured credit cards cannot be ruled out. Let’s see these cards in detail.
For Sole Proprietors with Bad Credit
A sole proprietor with a bad credit rating, may find it exceedingly difficult to get approved the very instant he/she applies for credit cards. More so, if it is unsecured. Thankfully, the entrepreneur can work around this problem by applying for secured instant approval (bad credit) cards. People must bear in mind that, in case of business credit cards, they can expect a response within 24 hours rather than 60 seconds.
Generally, a credit limit of up to $100,000 is available on the card that is secured by an FDIC-insured business savings account deposit. Instant approval credit cards have a number of benefits for a sole proprietor (or a small businessman), since they help in rebuilding damaged credit. The entrepreneur is given access to a line of credit that is not tied to his/her personal credit card. However, making regular payments can help the proprietor improve the credit rating of the business or in other words his/her own credit scores, since the proprietorship is not a separate legal entity. Moreover, the proprietor will be able to closely monitor the expenses of the employees. Thus, these cards are highly advantageous and are a distinct possibility for small entrepreneurs who lack the desired credit-worthiness.
For Other Consumers with Bad Credit
Consumers can apply for secured instant approval credit cards, since the collateral provides a modicum of comfort to the credit card companies. The line of credit is generally secured by a CD and the credit limit varies between 50 and 100 percent of the deposit. Having up to $5,000 as a secured line of credit is not bad, especially when the consumer can get it approved regardless of the credit history or the annual income.
In addition to the benefit of instant approval, these cards can help consumers improve their credit-utilization ratio. Since the consumer’s credit score and the credit-utilization ratio are inversely related, the cardholder should strive to maintain a low credit-utilization ratio. This is possible provided the credit limit increases, while the outstanding balance remains almost constant. In other words, the consumer should strive to pay-off the entire balance on the card rather than just the minimum balance. Instant approval credit cards for bad credit generally have a high interest rate or a high annual percentage rate (APR). Secured credit cards also have a higher APR as compared to unsecured credit cards. Thus, one can expect most secured instant approval credit cards to carry a really high interest rate. Since the Credit Cardholders’ Bill of Rights was signed into law in May 2009, the interest rate has increased significantly, credit limits have been reduced, while the account set-up fee and the annual fee have increased substantially. In the enthusiasm to get these cards, one should not forget the limitations and the restrictions of the same.