Best credit cards for bad credit in August 2022

Compare Bankrate’s best cards for bad credit

A closer look at top credit cards for bad credit

Capital One Platinum Secured Credit Card: Best for rebuilding credit

• What we love about the Capital One Platinum Secured Credit Card: With its automatic credit line review after six months of responsible use and its security deposit that’s lower than most annual fees, the Capital One Platinum Secured is an affordable and efficient credit-building tool.
• Who this card is good for: Simplicity-lovers building their credit scores. There’s not a lot of fluff that comes with this card — you won’t earn cash back or points.
• Alternatives: If you’re not willing to tie up money in a security deposit, you may be able to qualify for an unsecured credit card like the Petal 1 Visa card or the Mission Lane Visa card.

Learn more: Who should get the Capital One Platinum Card?
Read our Capital One Platinum Secured Credit Card review.
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Mission Lane Visa Credit Card: Best for low annual fee

• What we love about the Mission Lane Visa Credit Card: This card is a straightforward credit-building tool. It doesn’t come with a lot of the bells and whistles of traditional credit cards, but it makes up for it by being an accessible, inexpensive option for building credit.
• Who this card is good for: Credit builders looking for an inexpensive card to start their credit-building journey. The annual fee is reasonable — ranging from $0 to $59 — and there is no need to tie up your funds in a security deposit.
• Alternatives: If you’re looking for a card that will give you a higher credit limit to work with, it may be worth it to consider other options. The Capital One Quicksilver Secured Cash Rewards Credit Card, for example, provides cardholders the opportunity to have a credit limit that matches their security deposit, so your credit limit can be as high or low as you’d like.

Learn more: How to use the Mission Lane Visa Card
Read our Mission Lane Visa Credit Card review.
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Discover it Secured Credit Card: Best secured card with rewards

• What we love about the Discover it Secured Credit Card: It’s rare to find a secured credit card with features and benefits that mimic those of a top rewards card. This card not only earns rewards, but also touts notable features like the Cashback Match™ offer (Discover will match all the cash back you’ve earned at the end of your first year), all while charging no annual fee.
• Who this card is good for: Credit-builders who want a chance to show off responsible credit use while avoiding annual fees and earning rewards. This is one of the only no-annual-fee cards available with poor credit that earns cash back, so it should offer solid long-term value even after you’ve used it to build credit history.
• Alternatives: If paying a security deposit isn’t an option for you, there are unsecured credit cards that are open to people with low credit scores. The Petal 1 “No Annual Fee” Visa Credit Card is a solid option thanks to its $0 annual fee and chance at a high credit limit. The Mission Lane Visa Credit Card is another relatively low-cost — if bare-bones — option for people who have bad credit due to credit missteps like late payments.

Learn more: Discover it Secured vs. Petal 1
Read our Discover it Secured Credit Card review.
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Petal 1 “No Annual Fee” Visa Credit Card: Best for unsecured credit-building

• What we love about the Petal 1 “No Annual Fee” Visa Credit Card: Along with your credit score, this low-cost unsecured credit card uses alternative credit data to help determine your creditworthiness, which makes it more accessible to people with limited or no credit history. It also comes with a taste of rewards: Cardholders are automatically enrolled in the Petal Perks program and can earn anywhere from 2 percent to 10 percent cash back at eligible merchants.
• Who this card is good for: Credit-builders who can keep their balances low or paid in full and who want to graduate to the Petal® 2 “Cash Back, No Fees” Visa® Credit Card, which is one of the best credit-building cards for people with limited or no credit history.
• Alternatives: If you can’t qualify for the Petal 1 card or worry about the card’s high APR range, a low-interest secured credit card is a good substitute that can give you time to get credit-ready for better options. The OpenSky Secured Visa and the Merrick Bank Secured Credit Card both carry relatively low annual fees and APRs, making them great options for building credit with a lower ongoing APR for times when you can’t pay your balance in full.

Learn more: Is the Petal 1 worth it?
Read our Petal 1 “No Annual Fee” Visa Credit Card review.
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Self – Credit Builder Account with Secured Visa Credit Card: Best for building credit with savings

• What we love about the Self – Credit Builder Account with Secured Visa: When you’re approved for the Self Visa card, you’re granted a loan that’s placed into an interest-bearing account. Repayments of that loan are reported to the credit bureaus — helping you boost your credit score. Once you’ve repaid the loan, the principal and interest can be used as a security deposit for your credit card.
• Who this card is good for: People who want to build their credit and their savings simultaneously.
• Alternatives: If you’re looking for access to a line of credit immediately, a secured card like the Citi® Secured Mastercard® could be the right choice. The $200 minimum security deposit could be refunded after 18 months of using the card responsibly.

Learn more: How to use the Self Credit Builder Account with Secured Visa
Read our Self – Credit Builder Account with Secured Visa Credit Card review.
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OpenSky Secured Visa Credit Card: Best for low-interest credit-building

• What we love about the OpenSky Secured Visa Credit Card: You can choose your own credit limit (up to $3,000 with a matching deposit). And if you tend to carry a balance, its 18.14 percent variable APR can save you a lot of money compared to other credit cards for bad credit.
• Who this card is good for: Someone who wants more control over their credit. Choosing your own credit limit can help you manage your credit utilization ratio and credit score more effectively.
• Alternatives: If you can pay your balances in full each month and don’t need a low-interest credit card, the BankAmericard® Secured Credit Card comes with a higher potential credit limit (a maximum of $5,000 based on your deposit) but also a higher APR.

Read our OpenSky Secured Visa Credit Card review.
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All information about the BankAmericard® Secured Credit Card has been collected independently by Bankrate.com and has not been reviewed or approved by the issuer.

What is a bad credit score?

A bad credit score — a FICO score under 579 — can happen for a number of reasons and negatively impact your finances. Defaulting on loans, missing credit card payments or even opening too many credit cards can negatively impact your credit score. If you’re a victim of credit card fraud or identity theft, your credit score could also take a hit, making it more difficult to qualify for the financial products and services you need. Renting an apartment, getting a credit card or applying for a mortgage all become more difficult with poor credit. Thankfully, there are ways to build your credit with a credit card.

When should you get a credit card for bad credit?

There are credit cards designed to help you repair your credit. They have fewer requirements needed to qualify and come with credit-building features, which may include affordable interest rates, limited fees or free credit score access and credit monitoring. When used responsibly, credit cards for bad credit are a good fit for the following people:

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  When you’re rebuilding your credit

  People who have made credit mistakes in the past may find it a bit difficult to qualify for a more typical unsecured credit card or a credit card that comes with a lot of perks and rewards. Secured credit cards and unsecured credit cards built for people with bad credit often have low barriers of entry for approval in terms of credit scores. Choose a standout card in the category, focus on using it responsibly (via on-time payments and keeping your credit utilization ratio low) and, ultimately, you should be able to “graduate” to a better credit card. Keep in mind if you use an unsecured credit card with bad credit, you may be subject to higher APRs, very little benefits and annual fees.

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  When you’re new to credit

  Credit cards for bad credit are often accessible for people who have little or no credit (there are also great cards available for people with no credit history), given the lighter qualification requirements. If you’re a student seeking to start building credit, you may find a better match in the various student cards on the market, which feature student-centric perks and benefits that secured credit cards do not. If you’re not a student, but still brand-new to credit, there are starter credit cards that have lenient terms and offer a way to prove your creditworthiness.

Pros and cons of credit cards for bad credit

Types of credit cards for bad credit

Secured cards for bad credit

Typically, having bad credit means you either just started out building credit or you made financial mistakes in the past that are sticking with you. Either way, secured cards are a great way to learn responsible credit use while issuers maintain a safety net for themselves in the form of credit card security deposits. When you open a secured credit card, you typically provide cash upfront that often acts as your starting credit limit. If you default on your card, the issuer keeps your security deposit, but if you use the card responsibly with on-time payments and low credit utilization, you may be able to increase your credit score and graduate to an unsecured card.

Unsecured cards for bad credit

If you don’t want to — or can’t — provide the funds for a security deposit, unsecured credit cards are still available for people with bad credit. Unsecured cards for bad credit usually come with higher-than-average interest rates, no benefits and no rewards. You can still build credit with an unsecured credit card, but it’s important to do your best to avoid interest charges and practice positive credit use while you do so.

Student cards for bad credit

While college students without credit history don’t necessarily have bad credit, plenty of student credit cards may accept applicants with scores in the 500s. For example, the Discover it® Student Cash Back may be accessible for students without credit history (but other factors may influence your eligibility). What sets student credit cards apart from bad credit credit cards is that it’s much more common to find student credit cards with benefits, rewards, and no annual fees.

How to choose the right credit card for bad credit

Getting a credit card for bad credit is an excellent opportunity to improve your credit profile, but it’s important to choose the right credit card for you. Here are some important factors to consider:

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  Know your score

  Your credit score helps you narrow down which credit cards are available to you. It’s also important to understand the factors that affect your score so that you can avoid pitfalls that will slow down your credit-building progress and show creditors you know how to use a credit card responsibly.

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  Secured or unsecured?

  At this stage of your credit-building journey, you’ll need to know the difference between secured and unsecured credit cards. Unsecured cards can be more convenient since, unlike secured cards, they don’t require you to tie up money in a security deposit; however, unsecured cards for bad credit also tend to be more expensive and are sometimes harder to qualify for. If you can’t qualify for an unsecured credit card with the features that can help you grow your credit score, you’ll want to know how to choose a secured credit card that fits your credit profile and doesn’t charge too many fees.

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  Know the fees

  Watch out for common credit card fees, which can be especially high on cards for people with low credit scores. These include annual fees, late fees and balance transfer fees. Such fees can add to your debt and make it harder to build credit. Fortunately, the right credit card and responsible use can both help you avoid many of these fees.

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  Plan ahead

  As your credit score starts to grow, you’ll need to be ready for new opportunities. If you practice good credit habits, your card issuer may let you upgrade to a new credit card. But should you? Make sure you know how to compare credit cards ahead of time so you know what features to look for and what cards to avoid.

Still unsure if a credit card is right for you even if you have bad credit? Check out our Credit Card Spender Type Tool, where you can get personalized credit card recommendations based on your credit score, spending habits and daily needs.

How to build your credit score with a credit card

Responsible credit card use is one of the best ways to build a positive credit history and move on to the next stage of your credit journey: Finding a credit card for fair credit. Here are five tips to follow to help you improve a bad credit score:

1. Check your credit report. If you know how to read your credit report, you’ll have an easier time tracking your progress to good credit. Credit report errors are also common, so keeping an eye on your credit report will make it easier to stay on top of any mistakes that could have a negative impact on your credit.
2. Pay down debt. Carrying too much debt makes it harder to save money, grow your credit score, and develop good credit habits. To grow your credit score, you’ll need to make sure to pay down and stay out of credit card debt.
3. Have a budget. Sticking to a budget makes it much easier to pay off credit card debt and grow your personal finances. You can choose a budgeting method that’s right for you or use a budgeting app, which can take some of the stress and hard work out of the process.
4. Practice good credit habits. To grow your credit score, you’ll need to pay your bills on time, keep a healthy amount of available credit, maintain low balances when possible and do your best not to spend beyond your means. Your continued good credit behavior will be rewarded as enough time passes and past debts fall off your credit report.
5. Keep accounts open. As time goes on, you may outgrow your starter credit card. And while it may make sense to close a secured credit card or an unused card with an annual fee, there are consequences to closing a credit card. To protect your credit score, you should consider keeping your accounts open.

Credit-building alternatives to credit cards

Although responsible use of a credit card is a great way to build credit, it’s not the only way. In many cases you’re better off building your credit without using a credit card — perhaps your credit score isn’t in the right place (many credit cards aimed at people with low scores are predatory in nature) or because you’re simply not ready to carry the responsibility of using a credit card wisely. In either case, there are plenty of suitable options for people looking to build their credit without using a credit card.

Get a credit-builder loan

A credit-builder loan is a great tool for someone who doesn’t have strong enough credit to be approved for a credit card, but still hopes to build their credit score. With a credit-builder loan, you’ll receive the loan amount (usually between $300 to $1,000 dollars) to a secure account that you won’t have access to right away. You’ll make a fixed monthly payment until you’ve paid off the entire amount of the loan and then get the full amount back. All of your payments will be reported to the three credit bureaus, which boosts your credit score over time.

Repay an existing loan

Repaying an existing loan — like a car or student loan — can help you improve your credit score if you pay on time and pay your entire balance each month. All loan payments are reported to the credit bureaus by the lender. Conversely, defaulting on a loan, or not making payments in a timely manner can negatively affect your credit score.

Report existing bills

A tool like Experian Boost can help you build your credit score quickly by adding alternative data to your credit report. The Experian Boost service lets users add cell phone bills, cable and internet bills, gas bills, electric bills and bills for streaming services to their credit reports. Traditionally these types of bills had no impact on your credit report because they weren’t reported to the three credit bureaus, but with Experian Boost these payments are used by FICO to calculate your score.

Video guide: What to do if your credit card application is denied

Further reading on bad credit credit cards

Having bad credit is an uphill battle, but being informed and armed with research is the best tool in your arsenal. Here’s more information on credit cards and bad credit:

• Here’s what you need to know about average credit card debt and delinquency in the U.S.
• Credit cards for a 500 credit score (or less).
• Is no credit better than bad credit? We weigh in.

Have more questions for our credit cards editors? Feel free to send us an email, find us on Facebook, or Tweet us @Bankrate.