It can be difficult to get approved for a credit card after declaring bankruptcy. Bankruptcy has a large and negative effect on one's credit score. Potential lenders, including most credit card companies, are understandably reluctant to do business with a person who has been in a bad financial situation that includes nonpayment of debts. That does not mean it is impossible to get a new card, but it does mean that the terms of the agreement will be in the lender's favor.

The difficulty in obtaining a credit card after bankruptcy is one reason why many people choose to wait a long time before they do so. It can be easier to keep one's financial situation simple for a while and work on building good spending habits. Sometimes people are eager to rebuild a higher credit score and a positive payment history after filing bankruptcy. Getting a credit card and paying off the balance every month can be a good way to do this. It shows potential lenders that an individual has made changes and has become more financially stable.

The type of credit card that people are most likely to be approved for after filing for bankruptcy is a secured card. With a secured credit card, the individual must deposit a certain amount of money that the company will place in a bank account. This amount is often 100 to 150 percent of what the card's credit limit will be. The individual then uses it just like a regular credit card, and the money that was deposited is used as a form of insurance for the company in case the person does not pay their bill. In the event of nonpayment, the money is taken from the bank account to cover the amount owed. Over time, the credit limit can be raised if the bill is paid regularly and on time.

There are obvious drawbacks to using secured credit cards. For one thing, the individual must have a large amount of money available to send in as the security deposit. Some of them have income or age requirements that must be met for the customer to be approved. A credit card that is given after a bankruptcy is likely to have many fees associated with it. It will probably cost more to have and use than an average credit card. The fees often include an annual membership charge simply for having the card, processing fees for setting up the account, and a high interest rate. It is often the only option, though, and a secured card can work well to help establish good credit if used wisely.

Be sure to research and compare the terms of multiple credit cards before choosing one in order to get the best deal. Read the terms of service and understand exactly how a specific card works before applying for it. When trying to rebuild good credit by using a credit card, you don't want to discover any unwanted surprises. Make sure that the company will report positive payment information to the credit bureaus to boost credit scores. Find out if there is a possibility of switching the card to unsecured status after a certain number of on-time payments.