Top 15 Credit Cards For Bad Credit of 2016

Credit card companies are like bad friends: all over you when you’re flush with money but nowhere to be seen when you’re broke. If you’re shopping for a credit card and have great credit, they will fight for your business. Not so much, if you have bad credit. What’s more, many of the companies that do target those with bad credit charge predatory interest rates and exorbitant fees for the privilege.

This comprehensive review of the best credit cards available for people with bad credit scores will help you avoid the scams and misleading offers touted by opportunistic and unscrupulous credit card companies. We will analyze the top 15 credit cards for bad credit and share useful tips on how to best use credit cards to repair your credit.

Before we dive into our list, we’d like to start with some tips on how to manage credit cards when you have bad credit. The harsh reality is that credit card companies consider customers with bad credit as a liability and either deny them credit or charge higher interest rates and annual fees to offset the risk. The good news is you can work your way out of bad credit.

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Related: If you’re a student and are looking for the best credit cards for students, check out this article.

How Do Credit Cards Help Rebuild Your Credit? 

Credit card companies report your payment history and credit usage to the credit bureaus: the companies in charge of keeping the credit file on which your credit score is based. Your payment history accounts for 35% of your score calculation. How much you owe in relation to available credit contributes 30% to your score’s calculation.

Super Tip: Unless it’s a real emergency and only as a slightly better alternative to getting a payday loan or selling your kidneys on the black market, don’t keep a balance on your credit card. When you have bad credit, interest rates can easily reach prohibitive levels of 30% or more. A low balance will also increase your available credit to debt ratio, which will boost your credit score.

There are four main credit card types available to people with bad credit. These are, in order of most to least desirable: unsecured credit cards, secured credit cards, department store cards & gas credit cards, and prepaid credit cards. We will start with our top picks for each category and then the entire list of cards.

Things to Look for When Choosing a Card

If your credit score is not great, you won’t be able to be too picky when it comes to applying for credit cards. That doesn’t mean you shouldn’t apply for just any old card either.

When looking for the best credit card for your financial circumstances consider the following:

APR: This is the annualized interest rate you will pay on your credit card balance. Try to find the lowest APR you can qualify for that meets your line of credit requirements. The APR is not so important when you are not planning to carry a balance.

Annual Fees: Spoiler alert, credit card companies are only in business to make money. Annual fees help increase the profitability of credit cards by covering the administrative costs of managing a credit card.

Line of credit: Because consumers with bad credit are a higher risk to lenders, credit card companies tend to offer lower lines of credit. Credit cards that accept applicants with low credit scores and have decent lines of credit are rare.

Research & Selection Methodology

SuperMoney’s team of credit card experts selected the top cards in each category based on their overall value to users. Of course, “value” is subjective depending on what credit card features are important to you. These are the factors on which we based our credit card selection algorithm:

  • Fees: Annual fees and also penalty fees
  • FICO score required: Naturally, this is particularly important for people with bad credit scores
  • Credit limits and security deposits: This is particularly important for secured credit cards
  • APR: Annual Percentage Rate or the interest you pay on your credit card balance
  • Reward rates, redemption options, and how difficult it is to redeem points or miles
  • Sign-Up Bonuses

How to Apply for a Credit Card with Bad Credit

As mentioned above, qualifying for a credit card is easier said than done when you have bad credit. Here is a step-by-step guide on how to apply:

  • Find out what your credit score isCredit Sesame lets you check your credit score for free. You don’t even have to provide a credit card.
  • Use a credit card database that allows you to filter credit cards by credit score requirements. We may be a little biased, but we feel SuperMoney’s Credit Score search engine is one of the best in the business. It’s completely free and allows you to filter cards by target credit score, fees, rewards, and interest rates.
  • Start with a secured credit card. If your credit score is really in the dumps, you may need to get a secured credit card first. Secured credit cards are not technically credit cards. They are debit cards that base your line of credit on how much you gave as a security deposit. In effect, you are paying interest to lend yourself money. The good news is that many banks and credit card issuers will upgrade you to a regular credit card once you can show a pattern of responsible card use for six months.
  • Pay your balance in full every month. If possible, pay it several times a month. This will keep your debt to credit ratio low, which may bump your credit score. Having a low balance — or even better a $0 balance — is particularly helpful if you do it just before applying for a new credit card.
Also, read >  The Credit Score You See May Differ from What Lenders See, but Does it Matter?

Related: How to get your first credit card if you’re a student.

Important Disclaimer: Credit score is not the only factor credit card companies consider when approving or denying applications. The credit scores used in this article are only guidelines. Your application may be accepted or denied regardless of whether you meet the credit score requirements mentioned.

Using Credit Card To Raise Money In Emergencies

Looking to raise money using credit cards? If you have good credit, getting a cash advance is a good idea to raise some emergency money. You just need to go to the nearest ATM. But credit card companies often charge a premium on cash advances with higher interest rates. And unlike regular transactions, there is almost no grace period for a cash advance. You’re being charged from the minute you clutch the bills in the palm of your hand. Use cash advances on credit cards with caution. Instead, look for better cash advance services, with lower interest rates from personal loan companies. They can often offer you the money you need just as fast and you may be able to avoid the heavy interest rates.

Best Unsecured Credit Card: Capital One Classic Platinum Credit Card

cccapitalone-creditcard-bad-creditThe Capital One Platinum Credit Card gives customers with a poor to fair credit score access to a real credit card and the chance to rebuild their credit, without having to pay a high annual fee. As you would expect, interest rates are high: 24.99% for purchases and balance transfers.

The Capital One Platinum Master Card has no annual fee and it gives you the benefits of a real credit card, such as fraud protection, and free access to your credit score. Customers who make their first five monthly payments on time qualify for a higher credit line.

Unfortunately, the Capital One Platinum is not available for users at the lower end of “bad credit.” For this reason, we also recommend the Milestone Gold MasterCard, which provides the benefits of a regular credit card and is more forgiving on really low credit scores.

Super Tip: Capital One allows you to request a soft pull on your credit score to determine your eligibility for a pre-qualified offer. This is a useful feature because applying for the card will not count as a credit card application, so it won’t harm your credit score.

Best Secured Credit Card: The DCU Visa Platinum Secured Credit Card

visa-rewards-credit-card-bad-creditOur favorite secured credit card is the USAA Secured Card Platinum MasterCard. Sadly, it is only available to U.S. military service members, veterans, and their families. If you’re not a member of the military, the

If you’re not a member of the military, the DCU Visa Platinum is another great option. It  gives people with bad credit access to the convenience of a credit card with an APR as low as 11.75% APR. The catch is that your credit limit is equal to your secured deposit: a minimum of $500.

However, there is no annual fee and you receive generous travel perks, such as free auto rental collision damage waiver and $50,000 in travel insurance coverage. Your secured deposit earns 0.05% interest and it’s refunded when you close the account.

Super Tip: If you’re not eligible to join the DCU credit union by virtue of your employment or place of residence, you can qualify by joining one of their associated charities. The cheapest options are a one-time $10 donation to the Reach Out for Schools foundation or a one-time $15 donation to the American Association of People with Disabilities.

Best Retail and Gas Credit Card: Walmart Credit Card

Walmart credit card

Walmart’s credit cards are some of the easiest credit cards to qualify for with bad credit. The store has two types of cards, the Walmart MasterCard and the Walmart Credit Card. Both cards offer up to 3% discounts on Walmart purchases, $0 fraud liability, no annual fee, and free monthly access to your FICO score. You can use the Walmart MasterCard anywhere a MasterCard is accepted, but it’s harder to get approved.

The Walmart Credit Card is only for in-store use but it’s easy to get approved. Interest rates for both cards are high but Walmart does report to all three credit bureaus, which will help improve your credit score without having to pay a dime in annual fees, security deposits or interest, as long as you never carry a balance. Both cards allow you to benefit from special financing deals for purchases worth more than $150.

Best Prepaid Credit Card: American Express Serve

amex-serve-credit-card-bad-creditA low monthly fee of $5.95 (no fee in TX, NY, or VT), free direct deposits, mobile check deposits, bank transfers. Cash reloads cost up to $3.95. ATMs, make the American Express Serve one of the best prepaid card out there. Sending and receiving money is free and there is no card replacement fee.

Although this card will not help your credit score, it gives you – without even a peek at your credit history – the convenience of a debit card, free access to your cash at over 23,000 ATMs, and you can add cash to your account for free. You can even deposit checks at no cost by using American Express’ mobile app.

Unsecured Credit Cards for Bad Credit (Scores 550 – 650)

Unsecured credit cards offer the best rewards, the lowest interest rates, and don’t require a security deposit to open an account. However, if your credit score is any lower than 550, you probably won’t qualify for an unsecured credit card. In that case, apply for a secured credit card and try for an unsecured credit card when your score improves. You can also try your luck with a department store or gas credit cards, which include some unsecured credit cards and are often much less selective about your credit history.
If your credit score is between 550 and 650, you may qualify for a few unsecured credit cards, but expect low lines of credit, high-interest rates, and outrageous fees.

Also, read >  Credit Union's Continue to Grow

Related: SuperMoney’s Collection of Best Prepaid Credit Cards of 2016

Milestone Gold MasterCardmilestone mastercard

The Milestone Gold MasterCard is an unsecured credit card that allows you to check if you pre-qualify. This means your credit won’t be hurt if you don’t meet the eligibility requirements. It does have an annual fee ranging from $35 to $99, depending on credit score.

Milestone Gold MasterCard charges a $35 annual fee and $25 fee for every authorized user added to the account. During the first year, there is no cash advance fee. After the first 12 months, there is either a $5 or 5% cash advance fee, whichever is greater (up to a maximum of $100), on every transaction. Foreign purchases come with a 1% fee.

Credit One Bank Visa Platinum Credit Cardcredit one bank visa platinum

The Credit One Bank Visa Platinum credit card has high-interest rates of up to 23.90% and an annual fee of $75 for the first year and $99 thereafter. Lines of credit start as low as $300, but you can qualify for a credit line increase if your make your first five payments on time. On the positive side, you get 1% back on all gas purchases and you receive complimentary free credit score tracking. As with the Captial One Classic Platinum, you can ask Credit One to prequalify you for credit, so applying for the card doesn’t affect your credit score further.

Discover it for Students.

If you’re enrolled in a 4-year college or university, the Discover it for Students may accept your application, even if your score is below 650. The card has no annual fee, no penalty APR, no late fees, no foreign transaction fees, no overlimit fees, and you get 5% cash back in certain categories that change each quarter and 1% cash back on all other purchases.

Secured Credit Cards for Bad Credit (Scores 300 – 600)

If you have no credit or a bad credit history, secured cards are an excellent option for establishing or rebuilding your credit. Even if your credit score is less than 550, you still have several secured cards to choose from. However, secured cards typically have more expensive annual fees and higher interest rates. They also require a deposit, which is held as a security to cover the balance in case the account is closed. The size of your deposit generally determines your credit limit. For instance, a deposit of $500 gives you a credit limit of $500. In some cases, the bank or credit union may increase the credit limit to more than your security deposit.visa-rewards-credit-card-bad-credit

DCU Visa Platinum Secured

A relatively low-interest rate of 11.90% APR and decent travel benefits without an annual fee make the DCU Visa Platinum the best deal in secured cards for non-military members.  It  gives people with bad credit access to the convenience of a credit card with an APR as low as 11.75% APR. The catch is that your credit limit is equal to your secured deposit: a minimum of $500.

The best thing about the DCU Visa Platinum is that it has no annual fee and you receive generous travel perks, such as free auto rental collision damage waiver and $50,000 in travel insurance coverage. Your secured deposit earns 0.05% interest and it’s refunded when you close the account.

Capital One Secured MasterCardcapital one secured mastercard

Capital One’s Secured MasterCard is designed for people with poor or no credit history who want to build or repair their credit and have cash on hand to make a security deposit. It has a $29 annual fee and the lowest minimum-security deposit in the market: $49 to $200, depending on how bad your credit is

. The security deposit and the annual fee buy you a credit line of $200 to $3,000, which can increase if you pay your bills on time. However, interest rates are high: 22.9% variable APR.

SDFCU EMV Savings Secured Visa Platinum Cardsdfcu emv savings secured visa platinum

The State Department Federal Credit Union’s EMV Savings Secured Visa Platinum Card offers rates as low as 7.24% APR with no annual or foreign transaction fees, without asking for income verification or a credit check. You also receive points for every dollar you spend; the card comes with the “new” chip-enabled technology.

The catch, as with most credit union secured cards, is that your credit limit is your security deposit, which has a minimum of $250. Anybody can join the SDFCU by choosing the American Consumer Council as an associated organization when filing a membership application.

Harley-Davidson Visa Secured Cardharley-davidson-visa-secured-credit-card

US Bank’s Harley-Davidson Visa Secured Card has no annual fee; gives you reward points you can redeem for Harley Davidson gift cards for every $1 you spend; and includes fraud protection and auto rental collision damage waiver. You even get a $10 Genuine Rewards Certificate.

Yet, it has a 23.24% APR and your credit limit is tied to your initial deposit.

USAA Secured Credit Card

USAA-Secured-MasterCardIf you, your spouse or parent serves or served in the military, the USAA Secured Credit Card may be your best option. It has a low-interest rate of 9.9%, a reasonable annual fee of $35 and no penalty APR rate. However, your credit limit is the determined by how much money you put in upfront ($250 to $5,000). This deposit is invested in a 2-year variable rate CD. As of September 2016, the annual percentage yield on the CD is 0.54%.

USAA is a members-only financial services company that is open to U.S. military service members, veterans with an honorable discharge and their family members. The USAA Secured Platinum MasterCard charges a variable APR rate of 9.90% to 19.90%, which varies depending on creditworthiness and applies to purchases, balance transfers and cash advances. There is no penalty rate for late payments, but there are fees to consider. For instance, there is a $35 annual fee and a 3% fee on balance transfers and cash advances (maximum of $200). However, the cash advance fee is waived when used to transfer funds electronically to a USAA deposit account.

Also, read >  Manage Your Credit With This Guide for Dummies

America First Credit Union Secured Visaamerica-firsts-secured-visa_toe

America First’s Secured Visa is another example of why credit unions are often the way to go for customers with bad credit. It has no annual fee, relatively low rates starting at 6.99% APR, and credit limits ranging from $200 to $15,000. This card is great for people trying to rebuild their credit because you can qualify for large credit limits, if you have the cash to place as a security deposit.

The America First’s secured credit card has no annual fee, which is a $30 to $70 saving, when you compare it to other secured credit cards. The cash advance fee is low compared to other cards, just 1.5% of the amount.  However, not everyone can become a member. You must meet the credit union’s eligibility requirements.

First Progress Platinum Elite MasterCardfirst-progress-platinum-elite-mastercard-secured-credit-card

The First Progress Platinum Elite MasterCard has a relatively low annual fee of $29, an ongoing APR of 19.99% and penalty fees and cash advance fees that will make you cry. However, no credit history or minimum credit score is required for approval. And if you don’t mind paying a higher annual fee of $39 or $44, you can get lower interest rates of 14.99% and 11.99% respectively.

The First Progress Platinum Elite is a secured card not a credit card. This means the line of credit is only as high as the security deposit made by the card member on application. The maximum credit limit is $2,000.

Department Store and Gas Credit Cards for Bad Credit

Store and gas credit cards are rarely a good deal, but they do have a place in the toolbox of consumers with bad credit. On the one hand, they are easier to qualify for than regular unsecured cards and don’t require a deposit. On the other hand, they generally have low credit limits and they’re not always accepted outside the establishment that issues them. Except for those that require a good-to-excellent credit score, which are obviously not an option for those with bad credit, the rewards they offer are not competitive and are restricted to purchases made at their stores. What’s more, not all of them report your account and payment history to the credit bureaus, which negates any credit repair benefit they may have.

Walmart Credit CardWalmart credit card

The Walmart Credit Card has no annual fee, does not require a deposit and you can use it wherever MasterCard cards are accepted. Customers with credit scores as low as 550 are considered.

The Walmart Credit Card is only for in-store use but it’s easy to get approved. Interest rates for both cards are high but Walmart does report to all three credit bureaus, which will help improve your credit score without having to pay a dime in annual fees, security deposits or interest, as long as you never carry a balance. Both cards allow you to benefit from special financing deals for purchases worth more than $150.

Marathon Credit Cardmarathon-visa--through-comenity-bank

The Marathon Credit Card is an unsecured credit card that approves customers with credit scores in the low 600s. Interest rates are high: 16.99% to 24.99% depending on your credit; and lines of credit start low, but they grow as you make regular and on time payments. The card’s main feature is a 25 cents a gallon rebate if you spend $1,000 a month on the card. Lower gas rebates apply if your spending levels are lower. If you drive a lot and your credit precludes you from the top rewards cards, the no-annual fee, and unlimited rebates could make this card a good option for rebuilding your credit.

Pre-Paid Credit Cards for Bad Credit Folks

Let’s start by saying that prepaid credit cards are not credit cards. They will not help improve your credit score and are usually, but not always, more expensive than using a debit card and a checking account. Having said that, if you don’t qualify for a reasonably-priced checking account; you don’t care about building credit; and you are chronic overspender; prepaid credit cards may provide you the convenience of a credit card while protecting you from racking up overdraft and late payment fees. Prepaid credit cards work in a similar way to a regular checking account. Once you deposit money into your prepaid card, also known as reloading, you can use at businesses or make cash withdrawals.

American Express Serveamex-serve-credit-card-bad-credit

American Express’ Serve card is the lowest-fee prepaid card available, as of 2016. If you register for direct deposit and you stick to American Express’ network of ATMs, you can get the equivalent of a free checking account with a debit.

It offers free ATM withdrawals at over 24,000 MoneyPass ATMs, free online bill pay, and American Express customer service for just $1 monthly. As far as prepaid cards go, American Express Serve is the card to beat.

American Express Bluebirdamerican-express-bluebird

The American Express Bluebird has no monthly fee, regardless of whether you have a direct deposit linked to your account or how much you reload every month. You can add money to your account for free from any Walmart cash register or by buying a reload back, which costs around $3.95. Withdrawals are surcharge-free if you stick to MoneyPass ATMs, but Bluebird will charge you a $2 fee per withdrawal.

However, you can get round this fee if you setup direct deposit for your paycheck or government benefits.

BB&T MoneyAccountbb&t moneyaccount

The beauty of BB&T’s Money Account is its simplicity. You only have to worry about three fees: a $2.50 fee, if you use an ATM out of BB&T’s network; a monthly fee of $5, which can be reduced to $3 if you make $1,000 in deposits a month; and a $5 fee for using international ATMs. All other transactions are free. Not a bad deal, if you’re willing to make BB&T’s MoneyAccount your main form of banking and your volume of deposits qualify you for the discounted monthly fee.

 So, Which Credit Card Should You Get, If You Have Bad Credit?

As you can see, even customers with bad credit have many credit card options to choose from. But make your selection wisely. A lot depends on what your financial goals are and what you can afford. Check out our Credit Card reviews, there are comments and tips from existing users you might find useful.
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  • lorenzo kirby

    Unlimited credit repair $39.99 a month
    http://Www.unlimitedcreditrepair.yolasite.com

  • mjf

    my credit score was like 578, i got a capital one credit card, and then my bank got me a secured credit card before it became unsecured..paid both off everytime i swiped them instantly for two years now, also financed a truck but put a lot down, and im way ahead of my truck payments and will pay off truck by end of 2016.but my credit scores jumped from 578 to like 726 now..i still got one or two collections on there and if i settle them with a deletion im sure my credit jumps a ot, and this year most of all my hard inquirys all fall off, like 20 of them..when i purchased my truck they shopped my credit around a lot..but in next year my goals to get my credit up to or close as i can get to the 800 score..then buy a home with a decent credit report as a first time home buyer..