Now Credit Cards for Bad Credit: Best & Worst of March 2020 Lenders & Personal Loans Poor Credit
You can get a credit card with bad credit, but it won’t be one of those cards you see advertised with rich rewards or exclusive perks. Instead, it will be a fairly basic card. That’s OK. You’re not going to be relying on this card forever. The idea is to use it to build or rebuild your credit, then move on to a better product.
We believe the best credit cards for bad credit are secured cards. With these cards, you provide a security deposit, which protects the issuer in case you don’t pay. (When you close or upgrade the account, you can get your deposit back.) The deposit reduces the risk, making secured cards some of the easiest cards to get. Approval isn’t guaranteed, though — you still need to show you have income, and bankruptcies or other serious problems on your credit report can cause you to be denied. Learn more about secured cards.
Other options include unsecured cards for bad credit, which don’t require a deposit but tend to charge high fees that, over time, add up to more than the typical deposit on a secured card. Store credit cards can also be easier to get, although they typically have low credit limits and high interest rates, so proceed with caution. Below are our recommendations for the best credit cards for bad credit, followed by some resources for those with bad credit and some cards we suggest you avoid.
CREDIT CARD FOR POOR CREDIT 2020
Our pick for – NO CREDIT CHECK
OpenSky® Secured Visa® Credit Card
The OpenSky® Secured Visa® Credit Card is a strong option for people struggling to build or rebuild credit, as well as for those without access to traditional banking services.
Card details
No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
Build credit quickly. OpenSky reports to all 3 major credit bureaus.
Rates, fees & offers
Annual fee
$35
Rewards rate
N/A
Bonus offer
None
Intro APR
N/A
Ongoing Apr
APR: 19.64% Variable APR
Cash Advance APR: 19.64%, Variable
Foreign Transaction Fee
3%
Recommended credit score
350 – 689
Our pick for – Low deposit
Capital One® Secured Mastercard®
If your credit is damaged but not necessarily destroyed, the Capital One® Secured Mastercard® is an excellent place to start rebuilding it.
Card details
No annual fee, and all the credit building benefits with responsible card use
Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
You will get an initial $200 credit line after making a security deposit of $49, $99, or $200, determined based on your creditworthiness
Get access to a higher credit line after making your first 5 monthly payments on time with no additional deposit needed
Easily manage your account 24/7 with online access, by phone or using our mobile app
It’s a credit card accepted at millions of locations worldwide
Rates, fees & offers
Annual fee
$0
Rewards rate
N/A
Bonus offer
None
Intro APR
N/A
Ongoing Apr
APR: 26.99% Variable APR
Cash Advance APR: 26.99%, Variable
Balance Transfer Fee
$0
Foreign Transaction Fee
None
Recommended credit score
Choosing a credit card for bad credit
Credit cards for bad credit typically come with low credit limits and high interest rates. That’s OK for now, because the primary purpose of these cards is to help you build credit or rebuild credit. When choosing a card, focus on:
- Reporting to credit bureaus. A card will help you build credit only if it reports your payments to the companies that assemble the credit reports that are the basis of credit scores. Look for a card that reports to all three major credit bureaus. Note that prepaid cards do not report to the credit bureaus because they do not involve borrowing money.
- Low fees. Unsecured credit cards for bad credit often boast that you can apply for them with no deposit. But then they hit you with annual fees, maintenance charges and other credit card fees that can easily top $100 a year. Good secured credit cards have either no annual fee or a fairly small one, and no hidden charges. You do pay a deposit — but you can get that money back.
- Free credit score. Look for an issuer that provides free access to your score so you can track your progress. Ideally, the issuer would also offer other resources such as debt-payment calculators and free financial education programs.
- A path to upgrade. Once your credit improves, it’s nice to be able to convert your account to a card with better terms. If you have a secured card, will the issuer transition you to a regular unsecured card? If you have an unsecured card for bad credit, can you move up to a version with no fees or one that offers rewards?
How to raise your credit score using a credit card
A low credit score isn’t a life sentence. It’s a starting point. Using a credit card responsibly is one of the fastest ways to build credit. Follow these tips:
- Use the card. Building a good credit history starts with making on-time payments. So use your credit card regularly and pay your bill before your due date.
- Don’t overuse the card. A key element in your credit score is your credit utilization, or how much of your available credit you’re using. A maxed-out card is a sign of someone in financial trouble. So keep utilization below 30% at all times. On a card with a $300 credit limit, for example, that means you should keep your balance under $90.
- Pay on time and in full. With any credit card, the best move is to pay your entire balance in full every month. That way, you’ll never pay interest — and the interest rates on credit cards for bad credit are typically very high. If you can’t pay in full, pay at least the minimum amount due by your due date.
- Track your progress. Check your credit score and credit report regularly to see whether you’re moving in the right direction or if other things are holding you back.
- Keep accounts open, if possible. The age of your open credit accounts is a factor in your credit score. So don’t close accounts unless there’s a compelling reason, such as an annual fee on a card you don’t plan to use. When it comes time to upgrade from a secured card to an unsecured one, see if your issuer will let you keep your same account.
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