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How to Find the Best Unsecured Credit Cards for Bad Credit

of Americans have bad credit.

Is your bad credit score holding you back from accessing credit? It’s a Catch-22 that many people face. In fact, according to Experian, 16% of Americans have a credit score that is considered poor. However, even with bad credit, you might be able to get approved for certain credit cards without paying a deposit.

Here’s a closer look at unsecured credit cards for people with bad credit. Learn what to look for, our top four recommendations, and how they compare with secured credit cards.

How to find the best unsecured credit cards for bad credit

Before deciding on an unsecured credit card, consider the following factors.

Credit score range

Credit card issuers offer cards designed for different credit score ranges.

For example, say your credit score is 605. The Milestone Gold Mastercard is for individuals with scores from 550 to 650, while the Deserve Classic Mastercard is for those with scores from 650 to 850. If you didn’t know the credit range score for either card, you might apply for the Deserve Classic Mastercard and get denied (and discouraged). However, you would’ve qualified for the Milestone Gold Mastercard.

So look for a card that caters to your credit score.

Credit line

Your credit line is the amount you will be able to borrow on the credit card. In most cases, the larger the credit line, the better it is for increasing your credit score in the long term. However, if you are nervous that you will overspend, a smaller credit line would be more advisable.

Interest Charges

The best credit cards only charge interest on balances that carry over from one billing cycle to the next. If you pay the full amount of your balance each month, you can avoid all interest charges. Read carefully, however, to see how many days you have to make your payment as that can vary widely.

Fees

However, cards for individuals with bad credit scores usually come with additional fees, so you should read the fee schedule closely. The Consumer Finance Protection Bureau recommends you call your credit card company if you see a fee you did not authorize. You should also file a written billing error notice. If that doesn’t help you can file a complaint with the CFPB.

The most common fee is an annual charge. It can range from $0 to $495 per year, though the fee on most cards for bad credit will be under $100 per year. Additional fees can include a monthly service fee, a one-time upfront processing fee, foreign exchange fees, balance transfer fees, and cash advance fees. Also, take note of any penalty fees you might face, such as those for late or returned payments.

Rewards

Some credit cards offer rewards for spending in the form of cashback or points. While these are more common with cards for fair-to-excellent credit, you will find some options for bad credit as well. The rewards can help you to get more for your money.

Annual percentage rates (APR)

Check and compare APRs as this is the amount of interest you will pay per year on balances that carry over past a billing cycle. Note, cards often have different APRs for purchases, cash advances, and balance transfers. Many cards allow you to apply or prequalify without hurting your credit score.

Additional features

Lastly, look out for other features and benefits that come with the card and add extra value. For example, emergency support, an extended warranty, travel insurance, car rental insurance, etc.

Take note of all of these factors and pick the card that provides the best overall value for you.

4 best unsecured credit cards for people with poor credit

Which unsecured cards for bad credit stand out among the rest? Our top picks include the following four:

1.Platinum Credit Card from Capital One

  • Credit score range from 560 to 750
  • Prequalify with no negative impact on your credit score
  • Annual fee: $0
  • Penalty fees up to $38
  • The minimum credit limit is $300
  • Access a credit limit increase after making five on-time payments
  • No foreign transaction fees, 24/7 travel assistance, travel accident insurance, auto rental collision damage waiver, and extended warranty

2. Milestone Gold Mastercard

  • Credit score range from 550 to 650
  • Prequalify with no negative impact on your credit score
  • Maximum credit limit of $300
  • Annual fee from $35 to $99 (depending on your credit score)
  • Penalty fees up to $38
  • Mastercard Gold Benefits

3. Indigo Platinum Mastercard

  • Credit score range from 550 to 650.
  • Prequalify with no negative impact on your credit score
  • Annual fee from $0 to $99 (depending on your credit score)
  • Penalty fees up to $38
  • Maximum credit limit of $300
  • Rental car insurance, travel and emergency assistance, roadside assistance, and extended warranty coverage

4. Credit One Bank Platinum Visa with Cashback Rewards

  • Credit score range from 560 to 700.
  • Prequalify with no negative impact on your credit score.
  • Annual fee $0 to $75 (depending on your credit).
  • 1% cashback rewards on all eligible purchases.
  • Credit line increase opportunities, minimum is $300.
  • Penalty fees up to $38.
  • Credit protection option.
  • Travel, accident, and auto rental collision insurance.

These cards allow you to apply online and find out exactly what APRs and fees you qualify for without impacting your credit score. Further, they are four of the easiest to get approved for as they are designed for people with credit scores below 600.

Unsecured vs. secured credit cards: What is the difference?

Unsecured credit cards do not require you to put down any deposit or collateral. You are assigned a credit limit and can charge up to that amount. However, secured credit cards require a deposit and the amount of the deposit becomes your credit limit.

Both cards enable you to pay off your balance over time as long as you make your minimum payment each month. Any balances that carryover will be subject to interest charges according to the annual percentage rate (APR) assigned to the account. Further fees may apply.

Here’s a quick comparison of the pros and cons of each card type.

Secured credit card pros and cons

Secured credit cards are typically for individuals with very poor credit. By putting down a deposit, you remove all risk for the credit card issuer. If you do not pay your bill, the issuer can use your deposit to pay your outstanding balance.

WEIGH THE RISKS AND BENEFITS

Here is a list of the benefits and the drawbacks to consider when shopping for secured credit cards.

Pros
  • Easy to get approved: Secured cards are easier to get approved for than unsecured cards, with issuers accepting credit scores as low as 300.
  • Build or improve your credit. Secured credit card issuers often report to the three credit bureaus. By paying your bills on time, you can build a positive line of credit.
  • Earn rewards. Some card issuers offer reward programs such as 1% cashback on purchases, which can help you to earn while you spend.
  • Higher credit line: You may be able to get a higher credit line than with an unsecured credit card and bad credit because you are paying a deposit.
Cons
  • Security deposit required. You have to pay a deposit up front before being issued a credit line.
  • Fees: You will likely be subject to more fees than people with good credit have to pay (annual fee, monthly fee, etc.)
  • Damage your credit. Poor management of your credit card, if you are not financially ready for a line of credit, can also hurt your credit.

Next, let’s look at unsecured credit cards.

Unsecured credit card pros and cons

Unsecured credit cards for poor credit do present a risk to the issuer because if the cardholder doesn’t pay, the issuer doesn’t have any collateral to cover the loss. To control their risk, issuers typically charge higher interest rates while limiting credit lines to small amounts from $200 to $500.

WEIGH THE RISKS AND BENEFITS

Here is a list of the benefits and the drawbacks to consider when shopping for unsecured credit cards.

Pros
  • Pay no deposit. Get access to a credit line without paying upfront. This is the biggest benefit.
  • Earn rewards. Some card issuers offer rewards when you use the card.
  • Build or improve your credit. Credit card issuers of unsecured cards usually report to the three major credit bureaus, so managing your card well can help to build your credit score.
  • Earn access to a higher credit limit. If you maintain a good payment record, you might be granted a higher credit limit over time.
Cons
  • Harder to get approved. These cards can be harder to get approved for than secured cards.
  • Low credit limit. These typically come with a low credit limit.
  • High annual percentage rates (APRs). Card issuers have to charge higher APRs to cover their level of risk.
  • Fees might apply. To offset some of the risk, credit card issuers might also charge fees (annual fees, processing fees, monthly service fees, etc.).
  • Damage your credit. Poor management of your credit card can also hurt your credit score.

Learn more about credit cards for bad credit.

Frequently asked questions about credit cards for bad credit

What is a guaranteed approval credit card?

Many people search for “guaranteed approval unsecured credit cards for bad credit,” but do they really exist? In truth, the only credit card with guaranteed approval is a prepaid one.

Anyone can get a prepaid card with no strings attached. While there are various credit cards (secured and unsecured) for people with bad credit, approval is never guaranteed.

Can you get a credit card with a 550 credit score?

It’s possible to get a credit card with a 550 credit score. Some secured credit card issuers allow credit scores as low as 300 and some unsecured card issuers allow for scores as low as 550.

However, keep in mind that card issuers look at more than just your credit score. You can be denied for other reasons, such as a recent bankruptcy, too high debt-to-income ratio, or other issues that present too much risk to the lender. The good news is you can usually find out if you prequalify without hurting your credit score.

How can you build your credit most efficiently with an unsecured credit card?

If improving your credit score is your primary goal, use the card on a regular basis, but keep the balance between 10% and 30% of your credit line. So, if your credit line is $300, keep the balance at or below $90. Further, always, always pay at least the minimum payment on time.

Managing your card this way shows you have self-control and can likely handle more credit in a responsible manner.

Review and compare unsecured credit cards

Ready to find the best unsecured credit card despite your bad credit? Great! Head over to our personal credit card review page to see dozens of credit cards side-by-side. Compare factors including credit score range, APR, fees, and more, to shortlist the best options for your situation. Then, get prequalified, compare your offers, and go with the best one.

Find your next credit card!