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Best Credit Cards for Bad Credit

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Our Favorite Credit Cards for Bad Credit:

  • Best Overall: Capital One® Secured Mastercard®
  • Best Unsecured Credit Card: Capital One® QuicksilverOne® Cash Rewards
  • Best for Rewards: Discover it® Secured Card
  • Best for No Credit Check: OpenSky® Secured Visa®
  • Lowest APR: SDFCU Savings Secured Visa Platinum Card

What Constitutes Bad Credit?

If you’ve found yourself in a situation where your credit score is poor, you’re not alone. According to FICO, around 37% percent of Americans have FICO Scores in the 300-850 range.

Unfortunately, a bad credit score can affect your financial freedom in more ways than one. It’s not only banks and credit card companies that are “nosy” about that seemingly fictitious number. Landlords, insurance companies, utility companies and cellphone providers are also going to be curious about your credit score and can sometimes deny services to you if your rating is low.

What actually constitutes a bad credit score? According to Experian, FICO score ranges fall into the following categories:

Credit Score Rating

ScoreRating
300-579Very poor
580-669Fair
670-739Good
740-799 Very good
800-850 Exceptional

Choosing a Credit Card

If you’re in the 400-500 credit score range and think there’s no way you can get a credit card, think again. However, there’s nothing more important than carefully researching all of your options, because unlike people with exceptional credit scores, you can’t afford to kill your score even more.

What to Look for in a Credit Card

If your credit is bad, it might be a good idea to look into a secured credit card. In general, credit card companies that offer secured credit cards overlook bad credit. (Yes, sometimes even if you have a bankruptcy to your name.)

Essentially, a secured card requires a cash collateral deposit that becomes the credit line for your account. For example, if you put $600 into the account, you can charge up to $600. Eventually, with good behavior (i.e., paying your credit card off every month) the company will likely allow you to extend your credit line.

Above all else, be sure you choose a card that reports to all three major credit bureaus: Experian, Equifax and TransUnion. That way, you can ensure that your credit rating goes up.

How to Apply for a Credit Card

Whatever you do, don’t apply for ten different credit cards all at one time. Because you’ll have done careful research (right?) and know which cards you’ll likely be approved for, you’ll want to apply for one at a time. Too many inquiries can further damage your credit score.

How to Increase your Credit Score

The worst thing you can do about your credit score is do nothing at all. And staying away from credit cards completely? Bad idea. You’ll never fully be able to rebuild your credit score by avoiding credit altogether.

When you do receive a credit card, charge a little and pay off the credit card each month. If you’re trying to rebuild credit, there’s no way you’ll achieve that by carrying a balance over from month to month.

Which credit card is right for you? | Capital One Canada

1. Best Overall: Capital One® Secured Mastercard®

If you need to build or rebuild credit, the Capital One® Secured Mastercard® is a great option.

Its $0 annual fee, almost–automatic credit increases (once your monthly payments are made) and built-in spending control options all spin your bad credit in a positive direction.

In addition, you’re able to watch the positive steps you’ve made by monitoring your credit profile and credit score.

Annual Fee$0
Purchase APR24.99% variable
APR for Cash Advances24.99% variable
Cash Advance Fee3% (minimum $10)
Penalty APRNone
Late Penalty FeeUp to $35
Capital One® QuicksilverOne® Cash Rewards

2. Best Unsecured Credit Card: Capital One® QuicksilverOne® Cash Rewards

It’s a little riskier for those who have bad credit choose to use an unsecured credit card, as the threat of high interest rates, potentially high annual fees and monthly maintenance fees can hamper your intentions of building good credit. That’s why, if you’re looking into an unsecured card, it’s important to take time to research the details of the cards for which you’re applying.

Capital One® QuicksilverOne® Cash Rewards credit card is one you can (and should!) consider because of the opportunity it can give you to strengthen your credit. In addition, this card offers unlimited 1.5% cash back on every purchase you make.

If you pay on time for your first five payments, you’re eligible for a higher line of credit.

Annual Fee$39
Purchase APR24.99% variable
APR for Cash Advances24.99% variable
Cash Advance FeeEither $10 or 3% of the amount, whichever is greater
Penalty APRNone
Late Penalty FeeUp to $35
Student Credit Cards for College Students | Discover

3. Best for Rewards: Discover it® Secured Card

Discover it® Secured Card allows cash back rewards on every purchase with 2% cash back on restaurant or gas purchases and an unlimited 1% back on everything else. Also, you get a dollar-for-dollar match of all the cash back you’ve earned–automatically–at the end of your first year.

As you’re researching cards, you’ll notice that most secured credit cards don’t have rewards programs, so Discover it® Secured Card’s $0 annual fee, plus rewards, are icing on the cake.

Annual Fee$0
Purchase APR24.24% variable
APR for Cash Advances26.24% variable
Cash Advance FeeEither $10 or 5% of the amount of each cash advance, whichever is greater
Penalty APRNone
Late Penalty FeeUp to $35
OpenSky Secured Visa Credit Card Overview

4. Best for No Credit Check: OpenSky® Secured Visa®

For those with bad credit, these three words can bring a major sigh of relief: No credit check.

OpenSky® Secured Visa® Credit Card is a great option if you’ve fallen on troubled times, and not just because of its no credit check policy: You’re not required to have a bank account.

Your deposit, which is refundable, becomes your credit line limit on your card. You can choose it yourself, from as low as $200 up to $3,000. OpenSky also reports to all three major credit bureaus, which means you can establish credit fast.

Annual Fee$35
Purchase APR0% Introductory APR for the first 3 months from account opening.
After that, your APR will be 17.39%.
APR for Cash Advances17.39%
Cash Advance FeeEither $6 or 5% of the amount of each cash advance, whichever is greater.
Penalty APRN/A
Late Penalty FeeUp to $38
Credit Cards | SDFCU

5. Lowest APR: SDFCU Savings Secured Visa Platinum

The highlights of the State Department Federal Credit Union, or SDFCU Savings Secured Visa Platinum Card, include a few major benefits, including a lower variable interest rate of 13.24%. This is one of the lower APRs among secured cards.

In addition, no income verification is required for approval, and there is no foreign transaction fee. Also, you get card-based life insurance along with this card. You do need to join the SDFCU before you apply for this card, but joining is easy and you’ll get a free membership.

For every $1 you spend, you’ll earn one point, which isn’t a great bonus point offer, but the low APR does benefit anyone who’s trying to build credit.

Annual Fee$0
Purchase APR13.24% variable
Cash Advance Fee$3
Penalty APRNone
Late Penalty FeeUp to $25

Final Thoughts

In your search for a credit card, beware of subprime credit cards that target people with bad credit. A combination of high-interest rates and extremely high fees could land you in a big low-credit mess all over again.

It’s important to build great credit habits, and there are tremendous resources for you. The most important thing to do consistently is to pay everything on time–including your library fines and medical bills, and especially your credit card.