Just because someone has been extremely careless with their credit card use in the past does not mean that they will not be able to obtain credit cards in the future. In fact, by being responsible with their card use post-bankruptcy, they may be able to begin to increase their credit score and find themselves recovering from their financial troubles.
There are both positive and negative consequences to opening credit card accounts. Since companies are able to slap high interest rates onto the cards, they stand to make a large amount of money. Applications may flood the mailboxes of those who have been been granted bankruptcy due to this financial incentive. Another danger of opening a credit card account is that the fine print in the credit card offer may include an annual fee. These companies are working hard to increase their profits, and an annual fee may quickly build up debt.
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The most basic danger of opening these cards after bankruptcy is due to the fact that people who have been irresponsible before are at a high risk of making the same mistakes again. This can lead them deeper into debt, destroying the benefits that bankruptcy has offered them in the first place.
There are benefits to opening an account. Someone can rebuild a credit score. There are also ways to lessen the dangers involved in opening an account. This may include finding someone who will co-sign for a card. When the company or bank sees that you have provided some level of financial protection, it may result in lower payments or interest rates. Also, institutions that know the individual well may be able to decrease the consequences of high balances. An example would be a bank where a person holds a checking account.
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