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Ask the Experts

William Klinger
Professor of Business at Raritan Valley Community College

What are the most important things to look for in a fair-credit credit card?

Because the cost of borrowing on a credit card is very high, a credit card should be considered as a method of payment, not a means to borrow money. That means one should pay off credit card balances each month and the interest rate on the card should not matter. What matters is reducing costs and searching for cards with no annual fee.

Why don't more banks and credit unions offer credit cards to people with fair credit?

Some institutions are not comfortable taking on the risk that people with fair credit may not repay the credit. Individuals with fair credit will need to demonstrate over time that they are good credit risks.

When you have fair credit, is it better to get a credit card with an annual fee or one that requires a refundable security deposit?

Everyone, not just people with fair credit, should look for ways to reduce costs. Annual fees are a cost that can be avoided by a refundable security deposit. One could do a present value analysis on the cost of a refundable security deposit but it is more important to have a mind-set of avoiding costs. Having that mind-set will help in the bigger picture of saving money and building better credit over the long term.

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