They can sometimes be referred to as easy approval credit cards, since they do not require credit checks and applicants tend to be approved easily. For this reason, they tend to be the preferred option for applicants with bad credit scores.
Secured Credit Cards
While secured credit cards are fairly common in North America, there are currently no secured credit cards available on the Australian market.
Similar to guaranteed approval credit cards, secured credit cards also tend to approve all applicants – as long as they have sufficient equity in a property, or are able to deposit a sum of money into the bank. Because these cards are secured against either a house or a deposit, the provider can draw against the security if the card holder falls into default.
Secured credit cards tend to be quite expensive to set up, due to the required title approval, and they also tend to charge high fees. They are a popular way for people with a poor repayment history to rebuild a credit rating, as most of them report repayments to the credit bureaus. After a year of consistent and responsible repayments, a poor credit rating can often be improved.
What are the alternatives?
One reason many applicants opt for a guaranteed approval credit card or secured credit card is their poor credit history. But if those types of cards aren’t available in Australia, what are your other options?
First up, apply for a copy of your credit file and see what it says about you. Apply to have any errors corrected, and start working on improving your credit. If you currently have a home loan, car loan, personal loan or credit card, make sure you pay all your repayments on time.
If that’s not possible, speak to your creditors to work something out, speak to a financial advisor to discuss your options, and consider a debt consolidation loan. If you have problems paying off your credit card, consider applying for a balance transfer credit card to take a break from interest and start paying down more of your debt.
If you have poor credit history or no credit history, try speaking to your bank to see if they could offer you a credit card. You may also want to look into ‘First’ credit cards, such as the ANZ First Card. These cards are targeted towards applicants with little or no credit history, and may be easier to get for those who are just starting out.
Instant Approval Credit Cards
Instant approval credit cards are similar to guaranteed approval cards, but they do actually involve some credit check consideration. These instant approval credit cards are often offered over the internet and will give a decision in around 60 seconds.
Be aware that they can sometimes charge a higher interest rate and offer a lower credit limit, as although they do have some form of credit check, they don’t use the same rating methods as standard cards.
Interested in an instant approval credit card? Check out the following instant approval credit card options:
- ANZ Low Rate
- ANZ Platinum Credit Card
- ANZ First Credit Card
- ANZ Frequent Flyer Black Credit Card
- Westpac Low Rate credit card
- Virgin Australia Velocity Flyer Card
Store cards are similar to instant approval credit cards, because they offer an instant approval at the store. Store cards are often the first credit card carried by many people. If you want to apply for a store card, check the interest rate, as it can often be much higher than standard cards. If this is the case, always pay off the balance at the end of the month before interest starts accruing.
A Final Thought…
The factor in common amongst guaranteed or instant approval cards is the low-level or non-existent credit check. But credit card companies are keen on applicants having a good credit score, because people’s previous behaviour with credit tends to be one of the best indicators of their future use of credit.
As defaulted debts and chasing these defaults is one of the biggest costs incurred by credit card providers, a good way of limiting their losses, and so maintaining lower interest rates, is to limit the number of people carrying their credit cards who have a poor credit history. For this reason, a prospective applicant should consider whether he or she really wants a card that doesn’t require any credit check.