Using Credit Cards After Completing Debt Management Plans

Once people have completed their debt management plans, they want life to get back to normal. This includes making purchases with credit cards. People realize that credit card use can help improve their credit ratings. Research shows that responsible use of a credit card following completion of a debt management plan can play a major role in rebuilding the credit record.

Once your debt management plan is complete you can apply and use credit cards again.

The correct way to use a credit card to improve credit rating involves using the card to make occasional affordable purchases and repaying the bill in full as soon as it is received. Alternatively, an automatic direct debit payment can be set up. By following these steps, no interest or late charges will accrue and credit rating should begin to climb. Consumers should avoid the temptation to use the card for every purchase or to buy items that cannot be paid for with cash because this could create debt.

People coming out of debt management plans may need credit cards for reasons other than credit rating improvement

Those who travel for work may use a card for travel expenses or to rent a car. Some people use credit cards to receive purchase protection that they cannot receive with other payment methods. Others prefer to carry a credit card rather than a large amount of cash, for safety reasons.

On the other hand, some people never want to use a credit card again. After completing a debt management plan, credit is unappealing to them, especially if excessive credit card spending was what landed them in debt. Credit cards for people with poor credit scores, such as those coming out of debt management plans, tend to have high interest rates. Some people would prefer to avoid this potential additional expense and the chance of falling into debt again.

Those who want to use a credit card should comparison-shop for the best deal. Vanquis Bank offers the Aquis, Granite, and Vanquis brand cards to consumers with poor credit. Representative APRs are approximately 29, 35, and 40 percent, respectively. These cards can carry interest rates as high as 60 percent based on the risk of the cardholder. Personal circumstances and acceptance criteria determine which card will be best for a consumer.

Aqua also offers a credit card suitable for people who recently completed a debt management plan

The representative APR is currently 29.7 percent but can reach up to 49.9 percent depending on provider criteria and level of risk presented by the cardholder. Capital One also caters to consumers with poor credit and offers several cards with representative APRs ranging from approximately 29 to 35 percent.

Consumers should think carefully and consult with an expert before using credit cards after completing a debt management plan. If they do decide to make the leap, they should choose the card with the lowest interest rate and most favourable terms available to them. By limiting credit card spending to what is affordable and repaying balances in full on time each month, these consumers can begin to rebuild their credit ratings.