Best credit cards for bad credit: Top picks

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credit cards for bad credit

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Credit cards for bad credit are typically set up to help you improve your credit history and raise your credit score. That can make it easier to borrow funds, access low interest rates and move forward with your long-term financial goals.

These cards generally report to the three major credit bureaus — Experian, TransUnion and Equifax. Those agencies collect and maintain data that forms your credit history and report. The credit bureaus share this information with banks, lenders, insurance companies and employers.

According to Experian, a credit score between 580 and 669 is below the average score of U.S. consumers. Those who have a credit score falling in this category are often referred to as subprime borrowers. It can be tough for these individuals to obtain credit, and loans they receive usually have higher interest rates.

A score of 579 or lower is frequently regarded as a poor credit rating. With a score at that level, you could be rejected for credit, and any credit card you do receive will probably come with additional fees or a required deposit.

Credit cards designed for those with bad credit often come with different fees and requirements than cards that are created for those with high credit. The key is to choose one that best fits your current situation, as well as your future plans.

CreditCards.com recently gathered the 10 best credit cards from its partners, and two credit cards for bad credit made the list — one secured and one unsecured.

Best secured credit card for bad credit

Capital One® Secured MasterCard®

No annual fee and the ability to easily build credit put the Capital One® Secured Mastercard® at the top of CreditCards.com’s list.

Highlights:

  • The Capital One® Secured Mastercard® offers a $200 credit line after depositing $49, $99 or $200, depending on creditworthiness. If additional money is deposited before the account opens, a higher credit line is available up to $3,000.
  • Regular reports are sent to the 3 major credit bureaus when this card is used, helping to build your credit responsibly.
  • After making the first five monthly payments on time (without having to make an additional deposit), you’ll get access to a higher credit line.

Who should get this card:

If you have a low credit rating — such as a score between 350 and 629 — or no credit, this card can be a solid option. But the Capital One® Secured Mastercard® card does carry a high variable APR (24.99 percent). If you maintain a balance from month-to-month, you can expect to pay quite a bit in interest.

Bottom line:

Some competing credit cards for bad credit have more fees and restrictions attached to them than the Capital One® Secured Mastercard®, making this option an attractive one. If you stick to a plan to build credit, and don’t carry a balance from month-to-month, this card can help you improve your score and gain access to more credit over time.

Additional secured credit cards for bad credit

These secured cards didn’t make CreditCards.com’s list, but they’re worth a look if you’re in the market for a new secured card.

Discover it® Secured Credit Card

Once you’ve been approved for the Discover it® Secured Credit Card, your security deposit of $200 or more will establish your credit line. The exact credit line is based on the amount of your deposit.

Who should get this card:

If you have a score that is lower than 600 and want to rebuild credit while earning rewards, the Discover it® Secured Credit Card is an excellent choice. It offers 2 percent cash back at restaurants and gas stations and 1 percent cash back on other purchases. Keep in mind that if you typically carry a balance from month-to-month, you’ll pay interest fees. This card has a variable 23.49 percent APR.

OpenSky® Secured Visa® Credit Card

This card allows you to control the credit limit. After you’ve been approved, your security deposit determines the size of your credit line, which can range from $200 to $3,000.

Who should get this card:

If you’ve undergone a bankruptcy or have various negative items on your credit report, this card can be a solid option. Regular reports are sent to the three major credit bureaus when this card is used, helping to build your credit responsibly. Fees associated with this card include an annual $35 fee and a variable APR of 17.64 percent.

USAA Secured Card® American Express® Card

USAA membership is only available for U.S. military service members, veterans who have received an honorable discharge and their eligible family members.

When you apply, the money you put in upfront —which can range from $250 to $5,000 — becomes the card’s credit limit.

Who should get this card:

If you are involved in the U.S. military and are eligible, this card offers a solid solution to build credit and access additional benefits that are specifically tailored to military situations. Opening the USAA Secured Card® American Express® Card also opens a 2-year Certificate of Deposit (CD). The CD is created from the security deposit for the card. The downside is that you might not receive the full earnings from the CD if you withdraw it before the 2-year span has ended. This card has a variable APR between 10.4 percent and 20.4 percent.

CARD SEARCH: Compare the top credit cards for bad credit.

Credit Cards for Bad Credit
Credit Card APR Type
Best Secured: Capital One® Secured Mastercard® 24.99 percent variable Secured
Best Unsecured: Credit One Bank® Unsecured Platinum Visa® Credit Card 15.65 percent to 24.15 percent variable Unsecured
Discover it® Secured Credit Card 23.49 percent variable Secured
OpenSky® Secured Visa® Credit Card 17.64 percent variable Secured
USAA Secured Card® American Express® Card 10.4 percent to 20.4 percent variable Secured
Credit One Bank® Cash Back Rewards card 15.65 percent to 24.15 percent variable Unsecured
First PREMIER® Bank MasterCard® Credit Card 36 percent Unsecured
Total VISA® Unsecured Credit Card 29.99 percent Unsecured

Best unsecured credit card for bad credit

Credit One Bank® Unsecured Platinum Visa® Credit Card

The Credit One Bank® Unsecured Platinum Visa® Credit Card’s lack of a deposit requirement, cash back rewards, flexible payment policy and the ability to build or rebuild credit put it at the top of CreditCards.com’s list.

Best features:

  • Regular reports are sent to the three major credit bureaus when this card is used, helping to build your credit responsibly.
  • The Credit One Bank® Unsecured Visa® Credit Card provides free online access to your credit score and credit report summary, which can help you track your progress as you work to improve your overall credit.
  • Cardholders earn 1 percent cash back for gas or groceries purchases.

Who should get this card:

  • This card is ideal for the individual who wants to build credit while earning cash-back rewards for gas or grocery purchases. But if you often miss payments or typically carry a balance, the high fees on this card could quickly cancel out any rewards earned. The Credit One Bank® Unsecured Visa® Credit Card includes an annual fee that ranges between $0 and $75 for the 1st year and between $0 and $99 for each following year. It has a variable APR that ranges between 15.65 percent and 24.15 percent.

Bottom line:

  • For a functional card that can be used to build credit and earn rewards, the Credit One Bank® Unsecured Visa® Credit Card is a great choice.

Additional unsecured credit cards for bad credit

While these cards didn’t make it onto CreditCards.com’s list, they are still worth a look if you’re interested in picking up an unsecured credit card for bad credit.

Credit One Bank® Cash Back Rewards

In addition to helping you build credit, this card offers cash-back rewards. And there are no out-of-pocket costs to open an account.

Who should get this card:

If you have poor to fair credit and are eager to rebuild your score, this card gives you the opportunity to do just that while earning rewards. You’ll receive 1% cash back when you buy gas and groceries with the card. Keep in mind that there are various fees with this card, including an annual fee, which can eat into rewards if the card isn’t paid off in full monthly. The annual fee is between $0 and $75 for the 1st year and between $0 and $99 after that. The variable APR is between 15.65 percent and 24.15 percent.

First PREMIER® Bank MasterCard® Credit Card

The First PREMIER® Bank MasterCard® Credit Card offers some nice perks for those interested in an unsecured credit card.

Who should get this card:

If you have very poor credit or have had a hard time getting approved for credit, this option might work for you. It offers the ability to easily track your FICO score and shop at wide variety of merchants. Fees on this card include a $75 fee for the 1st year and an annual fee of at least $45 after that. You’ll pay $95 to apply for the card and it has a 36 percent APR on purchases.

Total VISA® Unsecured Credit Card

It’s fast and easy to apply for the Total VISA® Unsecured Credit Card — you’ll get a response on approval in just seconds. It reports to all three major credit bureaus.

Who should get this card:

Like other unsecured cards, this card is a good fit if you’re just coming out of bankruptcy or have very poor credit. It’s widely accepted and can be used as a stepping stone to build credit. This card has an annual fee of $75 for the first year. After that, you’ll pay an annual fee of $48. The APR is 29.99 percent.

COMPARE: Search the best credit cards for bad credit.

The difference between secured and unsecured

Secured credit cards require an initial deposit, which serves as a layer of protection for the card issuer in case you miss payments.

The deposit you make often becomes your credit limit. But you may receive a credit line that is greater than the initial deposit.

A secured credit card otherwise operates in a way that is similar to a regular, unsecured credit card. You’ll be able to purchase items with the card and then make payments. Interest is charged on balances carried month-to-month.

Unlike secured credit cards, unsecured credit cards don’t require a deposit. They allow you to buy items, charge them to the account, and then pay off the balance.

But unsecured credit cards for bad credit tend to include additional fees and higher-than-average interest rates.

Before you apply

Knowledge is power when you’re getting ready to start using a credit card for bad credit.

First, you’ll want to know your credit score. You can access your free credit report at AnnualCreditReport.com. By law, you’re eligible to get a free copy of your report every 12 months from each of the 3 major credit reporting agencies.

Take some time to study the report and analyze what factors have been impacting your credit score. Doing so will help as you draw up new habits. For instance, if you have a tendency to forget when payments are due, consider setting up a reminder system.

It also helps to determine your reason for getting a credit card. Perhaps you want to build credit, have access to funds in case of an emergency or have a card that can be used when you travel.

Read through the fine print for extra fees or charges before you apply.

How to build credit

Getting approved for a card is an exciting step. Once you receive your new plastic, consider making small purchases and paying them off in full each month. Doing so will improve your track record of on-time payments.

Focus on using just one credit card as you establish a solid financial routine, and create a monthly budget if you don’t already have one. This will enable you to track expenses, including those related to your credit card.

Furthermore, using only a low amount of the total credit available will work to your advantage. Over time, you’ll be able to show lenders and credit agencies that you are using credit in a responsible way.

It may take several months or more, but responsible use can help you improve your credit score and gain access to a higher line of credit.

COMPARE CARDS: Search the best credit cards for bad credit.

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