February 21, 2018 in Credit Cards

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If your credit score is lower than 579, a credit card designed to help build your credit history and improve your score can be an effective tool. We’ve compiled the the best credit cards for bad credit from our partners. Find the card that best fits your needs and start your journey to a better credit score.

What is a bad credit score?
The difference between secured and unsecured credit cards
Before you apply
How to build credit

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.

Here are some of your best options for secured credit cards for bad credit:

Best Credit Cards for Bad Credit

  • Discover it® Secured Card
  • Capital One® Secured Mastercard®
  • USAA Secured Card® American Express®
  • OpenSky® Secured Visa® Credit Card
  • Citi® Secured Mastercard®
  • USAA Secured Card® Platinum Visa®
  • Total Visa® Unsecured Credit Card
  • First PREMIER® Bank Credit Card
  • Credit One® Bank Visa® Credit Card
  • First Progress Platinum Prestige Mastercard® Secured Credit Card

Building or rebuilding credit? Find a great credit card now.

Card Features Variable APR
Capital One Secured Mastercard Deposit may be smaller than credit limit 24.99%
Discover it Secured card $200 minimum deposit; 2% cash-back on restaurants and gas 24.24%
OpenSky Secured Visa $35 annual fee 18.39%

Discover it Secured card

If you have a score that is lower than 600 and want to rebuild credit while earning rewards, this is an excellent choice. After seven months, Discover will review your account monthly to see if you qualify for a security deposit refund. If you make consistent on-time payments, the issuer will let you know when you qualify for one of its unsecured cards.

Highlights:

  • 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.
  • Earn 2% back on restaurants and gas and 1% on everything else if you pay your bill in full each month. In addition, Discover will double your cash back the first year.

Who should get this card
If you have a score that is lower than 600 and want to rebuild credit while earning rewards, this is an excellent choice.

If can pay your bill in full each month, this also is a top choice because you’ll earn 2 percent back on restaurants and gas — up to $1,000 every quarter —  and get 1 percent back on everything else. In addition to the regular rewards, Discover will double your cash back the first year.

Keep in mind that if you typically carry a balance from month-to-month, you’ll pay interest fees. The APR is a variable 24.24 percent.

After seven months, Discover will review your account monthly to see if you qualify for a security deposit refund. If you make consistent on-time payments, the issuer will let you know when you qualify for one of its unsecured cards.

Capital One Secured Mastercard

This is one of the only secured cards with a deposit requirement that could be lower than your limit. The card also comes with an option to pay the opening deposit in installments over an 80-day period.

Highlights:

  • Depending on your credit history, get a $200 credit line for either a $49, $99 or $200 deposit. You can deposit more to get a higher limit — up to $1,000.
  • The APR is a variable 24.99 percent, but there are no annual fees, application fees or foreign transaction charges.
  • If you make the first five payments on time, you can increase your credit limit without any additional deposits.

Who should get this card
This card is a good fit for anyone with little or no history who might qualify for one of the lower deposit options. The card also comes with an option to pay the opening deposit in installments over an 80-day period, which may help people on a fixed income who are seeking to build credit.

The interest rate is high, so if you maintain a balance from month-to-month, you can expect to pay quite a bit in interest.

Not everyone can qualify for this card. If you have a non-discharged bankruptcy, a past due or over-the-limit Capital One card, a card that was charged off within the past year or your monthly income does not exceed your monthly housing payments by at least $425, you won’t be approved.

USAA Secured Card from American Express

The USAA Secured Card American Express Card is a cost-saving option for those who serve and their eligible family members.The card has a special low APR for deployed members of the U.S. armed forces — much lower than standard credit card interest rates — and, unlike most other unsecured cards, offers travel and auto protections and extended warranty coverage.

Highlights:

  • Get 4% APR up to a year during deployment. USAA will rebate all finance charges accrued if you serve in a qualified military campaign.
  • No foreign transactions fees when travelling outside of the US.

Here are some of your best options for unsecured credit cards for bad credit:

  • Credit One Bank Unsecured Platinum Visa Credit Card
  • Credit One Bank Cash Back Credit Card
  • First PREMIER Bank MasterCard
  • Total Visa Unsecured card
Unsecured credit cards for bad credit
Card Features Variable APR
Credit One Bank Unsecured Platinum Visa 1% cash back on gas and groceries 16.99% to 24.99%
Credit One Bank Cash Back Credit Card 1% cash back on gas and groceries 16.99% to 24.99%
First PREMIER Bank MasterCard $95 application fee 36%
Total Visa Unsecured card Annual fee: $75 first year, $48 thereafter 29.99%

Credit One Bank Unsecured Platinum Visa

This 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 of best unsecured cards for bad credit.

Highlights:

  • Earn 1 percent cash back on gas and groceries.
  • Pay an annual fee of between $0 and $99.
  • Receive free online access to your credit score and credit report summary.

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 $99.

It has a variable APR of 16.99 to 24.99 percent.

Credit One Bank Cash Back Credit Card

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 $99. The variable APR is between 16.99 and 24.99 percent.

First PREMIER Bank MasterCard

This 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 card

It’s fast and easy to apply for this 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.

Find the best credit cards for bad credit now.

What is a bad credit score?

Bad credit is typically defined as a credit score lower than 549. Major credit bureaus determine your credit score by measuring your ability to keep up with credit agreements such as credit card bills, loans, and utility bills.

A few different factors determine your credit score, such as:

  • The amount you owe to creditors
  • The length of your credit history
  • Mix of credit (loans vs. cards vs. bills)
  • New credit inquiries
  • Available credit
  • Credit utilization (how much of your available credit you’re using – the lower, the better)
  • Timeliness of payments

It’s important to keep in mind that credit scores are flexible and can change often depending on your individual credit activity.

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

Even if you have bad credit, credit cards aren’t necessarily off-limits. Consider these five tips for finding a card that fits your needs.

  1. Do your research. Be thorough in your research before applying and ensure it’s the right card for your needs. Look closely at any fees and interest rates.
  2. Check the fine print. Some credit cards for bad credit offer rewards programs such as cash back. But be wary of luxury cards. Although the benefits may be attractive, these cards often come with annual fees and high rates. Don’t apply to cards that you’re unlikely to qualify for, as this will hurt your score further. If you’re unsure of your credit score, check it at AnnualCreditReport.com.
  3. Transfer a balance. If you’re looking to transfer debt, consider balance transfer cards that allow you to put a balance on the card for an extended period of time for a low or zero interest rate.
  4. Keep balances low. Other than a balance transfer card, try to avoid putting large balances on a new credit card. Take a look at your credit limit, and try to keep balances low to lower your credit utilization.
  5. Try secured cards. If you’re finding it difficult to find a card that you qualify for, take a look at secured cards. These cards will still help you build your credit score but require a refundable deposit up front.

When you are ready, apply for a credit card here.

How to build credit

With time and smart decisions, you can improve your credit score and create a healthy financial environment.

Start by following these five tips for repairing bad credit:

  1. Check your credit report. Obtain your credit report and check it thoroughly for any errors. If you see any, be sure to submit a dispute.
  2. Clear debts. Catalog all of your debts and create a plan of attack to clear them. Prioritize your debts and stick to a payment schedule to pay everything down. Of course, this is easier said than done, but managing debt is a big step forward to improving your score.
  3. Spend smart. Ensure you’re making all of your payments on time and in full. Try to keep your balances low, and do your best not spend beyond your means.
  4. Stick to a plan. Although you can quickly find yourself with a negative score, building a positive score takes time. Stick to your financial plan, and don’t start aggressively opening and closing accounts unless it makes sense.
  5. Keep climbing. Length of credit history plays into your score, but recent activity has the most weight. Your continued good credit behavior will weigh heavier than historical mistakes.

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