Best credit cards for people with bad or poor credit

Best Credit Cards for Bad Credit (2018)

Unfortunately, bad credit and problems with getting a credit card go hand-in-hand. The irony is that one of the quickest ways to build good credit is by getting a credit card. So what can you do about this catch-22?

In most cases, the answer to improving bad credit is to get a secured credit card. Such credit cards feature a credit line that is secured by a deposit you make with the bank that issues your card. The deposit is refundable when your credit improves and you close the account in good standing.

Your credit limit is often the amount of money that you deposit, although this can vary. For instance, if you deposit $500, you get a credit line of the same amount. If you fail to pay your bill, the credit card issuer takes the money from your deposit.

Secured credit cards work like any other card. You can use them wherever credit cards are accepted, and you pay interest if you don’t pay off the balance. When you pay your secured credit card as agreed, you rebuild your credit over time. Eventually, you would become eligible for a regular unsecured card that doesn’t require a deposit.

There are some credit card issuers that offer unsecured cards that don’t require you to put down a deposit. Such cards aren’t usually a good choice, though, because they tend to have very high interest rates and fees.

What about prepaid debit cards?

Though they are similar to secured credit cards, prepaid debit cards aren’t an ideal choice for building credit. With these cards, you also put up money, but that money is put directly onto the card. While you get the convenience of having a credit card, you don’t benefit in terms of building your credit.

Rather than borrowing from the credit card issuer, as you do with a secured credit card, you use the money you put down as a deposit. This doesn’t help build your credit, but in essence, works the same way as a gift card.

Best Credit Cards for Bad Credit

The following secured credit cards are fairly easy to qualify for and help you build much-needed credit.

Secured CardsAPRAnnual Fee 
19.99%$29Apply
18.14%$35Apply
11.99%$44Apply
9.99%$48Apply

USAA Secured Card American Express®

A Fortune 500 company that offers insurance and banking and investments to military members, veterans and their families, USAA features the USAA Secured Card American Express®. With this card, the size of the credit limit is generally reflected in how much of a security deposit you put down. USAA deposits your money, which can be anywhere from $250 to $5,000, in an interest-yielding 0.54% annual percentage yield (APY) two-year CD.

This card features a variable annual percentage rate (APR) of 10.40% to 20.40%, depending on your credit and payment history. The same rate applies to purchases, cash advances and balance transfers.

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Pros:

  • Competitive interest rates of 10.4% to 20.4% APR
  • Same rate applies to all types of transactions, including purchases, transfers, and cash advances
  • You earn interest on your deposit through a CD
  • If you are eligible to be a USAA member, you are likely to qualify
  • You can get up to $5,000 credit

Cons:

  • $35 annual fee, plus a 3% fee on balance transfers and cash advances. (Fee waived if the cash advance is transferred to a USAA deposit account. First late or returned payment of every six billing periods is only $25.)
  • You can’t get the card if you aren’t eligible for USAA membership

Secured Mastercard from Capital One


The Secured Mastercard from Capital One features a security deposit of $49, $99 or $200, which is refundable. If you make the minimum required security deposit determined by the company, you’ll get an initial credit of $200. After you make at least five monthly payments on time without needing to increase your credit line with a deposit, you qualify for a higher credit line.

The interest rate for this card is 24.99% APR. There is no annual fee. You also enjoy free unlimited access to CreditWise, which provides credit scoring and credit monitoring tools.

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Pros:

  • No annual fee
  • Access to a higher credit line once you make five monthly on-time payments
  • Free access to credit scoring and monitoring tools
  • Platinum Mastercard benefits that include extended warranty at no charge for items you purchase with the card, as well as auto rental insurance, travel accident insurance and roadside assistance

Cons:

  • Interest rate of 24.99% APR is higher than some secured cards
  • 3% cash advance fee with a minimum fee of $10
  • Late payment fee of $35

First Progress Platinum Elite Mastercard Secured Credit Card


With the Platinum Elite Mastercard Secured Credit Card you can get a credit limit of $200 to $2,000. The limit must be backed by a security deposit of the same amount. This card features a 19.99% APR for purchases and a 24.99% APR for cash advances. If you get cash, you also pay $10 or 3% in fees, whichever is the greater amount. The annual fee is only $29, but late payment fees are $38 and returned payments cost you $27. This card reports to the three main credit bureaus, which means you can build credit fairly quickly, as long as you pay on time.

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Pros:

  • You can get up to $2,000 of credit line, as long as you have the money to secure the card
  • The annual fee is low at $29
  • This credit card provider reports to all three credit bureaus

Cons:

  • Any credit you receive must be fully backed by the same amount in a deposit
  • 19.99% APR for purchases and 24.99% APR for cash advances, including fees
  • Late payment fee of $38 and returned payment fee of $27

UNITY Visa Secured Credit Card


The UNITY Visa Secured Credit Card accepts anyone who has the cash to make a deposit equal to the credit line and pay an annual fee. Credit limits vary from $250 to $10,000. This is a substantially higher credit limit than many of the other secured cards.

This credit card issuer also reports to all three credit bureaus, which helps you build credit faster. The APR for purchases, balance transfers and cash advances is 17.99%. For the first six months, there’s a 9.95% APR introductory rate on balance transfers. This card also features a $39 annual fee that is waived for the first year.

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Pros:

  • As long as you have money to back it up, you can get a high credit limit
  • Six-month introductory 9.95% APR on balance transfers
  • Annual fee waived the first year
  • Reports to all three credit bureaus
  • Low penalty payments of $10 for late payments and $25 for returned payments

Cons:

  • 17.99% APR is high, considering you have backed the money with a deposit
  • $39 annual fee after the first year
  • 3% fee on cash advances and balance transfers. Minimum of $10 and maximum of $150
  • 2% foreign transaction fee
  • Other fees, including a $10 credit limit increase fee and a $1 phone assistance fee

Tips for making the most of your new secured card

They may require a deposit, but secured cards can help you rebuild your credit. Many borrowers find that if they spend carefully and pay the balance off every month, they improve their credit score enough to qualify for an unsecured card within about a year.

If your credit card issuer also has unsecured cards, when you’re ready, see whether you can transfer your secured line of credit to a new card. This will be better for your credit because it won’t mean opening open up a new account. Doing so can lower your credit score. When you do qualify for an unsecured credit card, celebrate your success at having raised your credit score.

Unsecured credit cards for bad credit

If you don’t have the funds for a secured credit card deposit, there are a few unsecured credit cards for bad credit. These options are more expensive in the long run if you don’t pay off the balance each month because of high interest rates. They also tend to charge high annual fees.

Use unsecured credit cards wisely by paying the balance off each month and you can rebuild your credit. Here are a few good choices of unsecured cards.

Unsecured Cards for Bad CreditAPRAnnual Fee 
29.99%*$152Apply
23.9%*$99Apply
23.9%*$35 to $75 depending on credit profileApply

Credit One Bank Cash Back Credit Card


Designed for borrowers with poor credit, the Credit One Bank Cash Back Credit Card unsecured card features interest rates from 16.99% to 24.99% APR. Although these rates are high, they are lower than some unsecured credit cards geared for bad credit. There could be no annual fee or one up to $99, depending on your credit history. You get 1% cash back on grocery, gas, phone and cable purchases, and you also might get 1.1% cash back on dining, depending on your credit.

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Pros:

  • 1% cash back on purchases, including groceries, gas, phone and cable
  • 1.1% cash back on dining, in addition to 1% on purchases, depending on credit
  • Though high, interest rates are among some of the lowest of credit cards for bad credit
  • No annual fee possible, depending on credit history
  • Free credit score tracking and email alerts

Cons:

  • Annual membership of up to $99, depending on credit history
  • High APR from 15.90% to 24.40%
  • Cash advance fee is $5 and 8% of the amount, or $10 and 3% of the amount, whichever is greater
  • $37 fee for late payments
  • $35 fee for returned payments

Indigo Platinum Mastercard


Ideal if you have poor to fair credit, the Indigo Platinum Mastercard allows you to rebuild your credit. The company reports monthly to all three credit reporting agencies. The interest rate is high at 23.9% APR, and cash advances are 29.9% APR. That means carrying a balance on this card can be pricey. There could be no annual fee or one up to $99, depending on your credit.

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Pros:

  • No annual fee possible, depending on credit history
  • Ability to prequalify without the lender pulling your credit report
  • No cash advance fee in the first year
  • Offers Mastercard gold benefits, including MasterRental coverage, road and travel assistance

Cons:

  • High 23.9% APR on purchases
  • High 29.9% APR on cash advances, although no fee for the first year
  • $99 annual fee possible, depending on credit
  • $37 late, over-the-limit and returned payment fees

Milestone Gold Mastercard

Created for people with poor credit who want to rebuild it, the Milestone Gold Mastercard allows you to prequalify without a check to your credit. The company also reports to all three credit reporting agencies monthly. This card’s APR is high at 23.9%. After the first year, there is a cash advance fee of 29.9% APR. There’s also an annual fee that ranges from $35 to $75 the first year and increases to $99 thereafter.

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Pros:

  • Ability to prequalify without the lender pulling your credit report
  • No cash advance fee in the first year
  • Offers Mastercard gold benefits, including MasterRental coverage, road and travel assistance

Cons:

  • High 23.9% APR on purchases
  • High 29.9% APR on cash advances, although no fee for the first year
  • $35 to $75 annual fee the first year, depending on your credit; $99 thereafter
  • After the first year, cash advance fee of $5 or 5%, whichever is greater
  • Foreign purchase fee of 1%
  • $37 fee for late and returned payments
  • $35 over-the-limit fee

Total VISA® Unsecured Credit Card


Designed for individuals with bad or no credit, the Total VISA® Unsecured Credit Card allows you to improve your credit score. Though you don’t have to come up with a deposit as you do with a secured card, the fees are high with this card. They include a one-time $89 processing fee, an annual fee of $75 and a 29.99% APR on purchases and cash advances.

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Pros:

  • Reports to all three credit bureaus
  • Lax eligibility requirements, making it possible for just about anyone to qualify

Cons:

  • High 29.99% APR on purchases and cash advances
  • One-time annual processing fee of $89
  • Annual fee of $75 that drops to $48 in subsequent years, but tacks on a monthly $6.25 service fee, raising the annual cost to $123
  • 5% cash advance fee (minimum $5)
  • $37 fee on returned and late payments
  • Initial credit line is only $300

For information and examples of some of the best secured and unsecured credit cards for bad credit, see SuperMoney’s Personal Credit Card Reviews.

How to Get a Credit Card With Bad Credit

How to Get a Credit Card With Bad Credit

Americans are practically swimming in credit cards, with a reported 323 million credit cards in use (source). If you are one of the one-third of Americans with a credit score below 600 (source) however, you may find that it is difficult to obtain a credit card when you need it.

Take heart. There are some actions you can take to make it easier to get a credit card even when you have bad or poor credit.

How does your credit score affect your ability to obtain a credit card?

When you apply for a new credit card, your credit card issuer will check your credit score. The reason for this is twofold. First, the credit card company wants to know if you qualify for the new card. Second, the company uses your credit score to figure out what interest rate they will offer you.

If you have excellent credit, the credit card issuer will likely offer you the lowest interest rate possible and a high credit limit. If, however, your credit is poor, the credit card company may decline your application or may offer a credit card with a much higher interest rate and a much smaller credit limit. That is why the general rule of thumb is that the best time to apply for credit is when you do not need it.

SuperMoney Super Bonus Tip: Even applying for a credit card may lower your credit score a bit because a credit card issuer will make a “hard” inquiry for your credit report. So, it is better to choose just one credit card for which to apply rather than submitting applications to multiple cards.

How can you improve your credit score?

Because credit cards with a high interest rate are rarely a good idea for those with poor credit, the ideal thing to do if you need a credit card is to work to improve your credit score before applying.

First, it is good to know the factors that determine your credit score. For the sake of simplicity, consider your FICO score, one of the most commonly used credit scores among lenders. Here is how the score breaks down:

  • 35 percent of your FICO score comes from your payment history.
  • 30 percent comes from your credit utilization, or the amount of debt you have in relation to your credit limits.
  • 15 percent comes from the length of your credit history.
  • 10 percent comes from credit inquiry frequency.
  • 10 percent comes from the mix of credit types you have, such as secured and unsecured loans, credit cards, and mortgages.

The most important way to improve your credit score is to pay your bills on time, every time. Late payments play havoc with your credit score. On-time payments, on the other hand, are credit-score gold.

If possible, reduce the amount you owe by paying extra on your loan payments and any credit cards you have. If that is not possible, you might want to try to find ways to increase your income. This will give you a little more wiggle room in your budget. But it will also help your credit utilization percentage and affect your credit score in a good way.

Concentrating on paying off small loans and debts one at the time may help you improve your credit score as well. Once you finish paying one loan, apply the extra cash to the next loan and so on, until your balances are in better shape. Your credit score will thank you.

What type of credit card is best for bad credit?

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 and gas credit cards.
  • Prepaid credit cards.

While a poor credit score will likely limit your choices somewhat, that does not mean that you should not compare all your options carefully. You should still compare factors such as the APR offered, the annual fees (which are sometimes much higher for credit cards offered to those with poor credit scores), and the credit limit offered.

What is the difference between an unsecured and a secured credit card?

Credit card companies that issue unsecured credit cards do not require you to put up any collateral for the card. When you get an unsecured credit card, your credit card company is, in essence, counting on your creditworthiness.

Secured credit cards are a different matter, however. With a secured credit card, the card issuer requires you to put up a deposit as collateral to get the card. Typically, the amount of your deposit determines your credit limit. If you should default on your credit card payments, the credit card issuer can take your deposit as payment for the credit card debt. There are fees associated with a secured credit card, much like the fees for unsecured credit cards.

While you are, in effect, borrowing money from yourself with secured credit cards, there are a couple of advantages to using secured cards. First, secured credit cards help you rebuild your credit. Using your secured card responsibly signals that you are the type of customer credit card companies want. Sometimes, your credit card issuer will convert your secured card to an unsecured card after 6 to 12 months, if you pay your credit card bill faithfully each month.

Second, a secured card gives you the convenience of using a credit card even if you do not currently qualify for an unsecured card. As is the case with a regular credit card, you can use your credit line over and over again so long as you keep making your credit card payments on time.

What is the difference between a prepaid card and a secured credit card?

Even though both secured credit cards and prepaid cards require you to pay in advance before using the card, the two cards are not the same.

A prepaid card is just as it sounds. You load money onto your prepaid card and then use the card to pay for items just as you would use a credit card. As long as there is money on the card, you can use it. When the money runs out, your card has no value. There is no monthly payment to worry about with a prepaid card, as your card balance simply goes down each time you make a purchase.

There are fees associated with prepaid cards. Some of these fees can be costly, so it is good to read your card agreement carefully before using a prepaid card to avoid unpleasant surprises.

A prepaid card gives you the convenience of paying for items like a credit card, but it is your own money you are using. It is not a loan or credit line from a credit card company. This means that a prepaid card does not help you establish or rebuild your credit, whereas a secured card will help you repair your credit if used properly.

Therefore, a secured credit card is usually a better option for those with poor credit who are working toward raising their credit scores.

How can you get a secured credit card?

To get a secured credit card, you will first need to find financial institutions that offer secured credit cards. Not all credit card companies offer secured options.

However, there are a number of companies that do. A little online research can help you compare secured credit cards to see which one looks like a good fit. Ideally, you should try to find a secured card that offers a low interest rate and no or low annual fee. If you are using the secured credit card to help boost your credit score, you will need to confirm that your card issuer reports to the three major credit bureaus: Experian, TransUnion, and Equifax. It is also a plus if the card issuer mentions that the card converts to an unsecured credit card after a specified time period.

You will also need to have enough money to set aside as a reasonable deposit amount. Remembering that your deposit amount influences the credit limit your card has, try to set aside a large enough amount that your credit limit will be useful to you. Typically, the minimum amount of your deposit must be $200 to $500 before a card issuer will consider your application.

If you apply online and get an approval from a card issuer, you will receive instructions on how and where to make your security deposit. Once you have completed everything required by your credit card issuer, you will receive your new secured credit card via mail.

Where can you find the best credit cards for bad credit?

It is a challenge to pick a winner out of the dozens of cards available for those with bad credit. Fortunately, you do not have to do it alone. SuperMoney allows you to sit back, weigh your options, check the best offers and read what other cardholders have to say about their experiences with credit cards through hundreds of user reviews. Why wait? Search the best credit card offers here.