In an economy that has many consumers seeking credit cards for bad credit, banks are tightening their lending standards. The Target Corp recently put out its earnings for the last quarter. In addition to suffering from sluggish retail activity, its earnings were hit hard by a $135 million loss it has to reserve to cover its rising delinquent credit card accounts. Adopting stricter lending requirements is one of the goals for the company to help it stay afloat. That means that fewer consumers will qualify for a Target credit card. In fact, the company has stated that its focus moving forward will be to provide quality goods and services to its customers in its retail stores. The company will likely not approve an account for those seeking credit cards for bad credit. It is a trend that many other retailers, banks and lenders are following. They have applied higher interest rates and fees, lowered allowed limits and closed accounts, because of so many delinquent accounts. Another company that followed suit and even raised the bar for standards is American Express. For their customers with continued unpaid bills, they are offering incentives to cancel their cards. It offered to pay those customers $300 to pay outstanding balances and close their accounts by the end of April. It seems that anyone looking for credit cards for bad credit will not be able to do business with AMEX.
With all the restrictive lending standards being adopted by credit card companies, where do consumers turn when they need credit cards for bad credit? The best way for people to establish credit and have a credit score is by having credit cards in good standing. You need a credit history to get credit. It is a tough dilemma for those struggling to establish credit or rebuild after some financial mistakes. That is not to say there are not plenty of credit cards for bad credit, but they come with a high cost in the form of high interest rates. Many exceed 35 percent. With such a high rate, a consumer who already has a less than perfect credit history can often fall into more debt and make his credit worse. A prepaid credit card is one of the best solutions for those looking for credit cards for bad credit. A credit card with a prepaid balance will not let consumers fall into the trappings of a regular card. The balance has been paid, so spending beyond means will not happen. And it will not let a consumer easily fall into debt. And a prepaid credit card does not need verification of credit score or credit report, since the consumer pays the balance first. This can be a fantastic solution for consumers who wish to have the convenience of a credit card for everyday uses, but may not qualify for traditional credit cards. Prepaid cards have an added bonus in that they train you to think about credit card spending differently, since it is your money paid up front. The disadvantage of cards that are paid in advance is that some require a small usage fee and they will not help you build your credit score or history.

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