Best Credit Cards for Bad Credit in February 2024

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Contributor, Benzinga
February 26, 2024
credit card for bad credit

Struggling with bad credit can make getting approved for a credit card seem like a tall order, but you can still apply for credit cards designed for people with poor or no credit history. These cards can help rebuild your credit score, which is your ticket to access more and better financial opportunities in the future.

This blog post reviews the best credit cards for bad credit in 2024 and provides actionable tips on how to choose the ideal one for your peculiar circumstance.

Quick Look: Best Credit Cards for Bad Credit

Best Credit Cards for Bad Credit

Some credit cards are designed to help people with poor credit histories rebuild their financial standing. They report on-time payments to credit bureaus to improve credit history.

1. Best Overall for Bad Credit: Capital One Platinum Secured Credit Card

The Capital One Platinum Secured Credit Card is a top pick for folks aiming to boost their credit. It's super straightforward, with no annual fee, no foreign transaction fee and no penalty annual percentage rate (APR). The flexible security deposit ranges from $49 to $200 based on your credit situation. The deposits qualify you for limits from $200 to $1,000, which could increase after six months of timely payments. It reports payment history to all three major credit bureaus.

Pros

  • No annual and foreign transaction fees
  • No penalty APR
  • Flexible security deposit

Cons

  • No rewards program
  • High regular APR 

2. Best for No-Fee Deposit: Discover it Secured Credit Card

The Discover it Secured Credit Card stands out with valuable rewards and the opportunity to reclaim your security deposit. There's no annual fee, foreign transaction fee or late fee for your first payment. You'll earn 2% cashback on up to $1,000 in combined purchases at gas stations and restaurants every quarter and 1% cashback on all other purchases. The card also reports to the three major credit bureaus, helping you build credit. After eight months, it automatically reviews your account for a potential upgrade to an unsecured card.

Pros

  • No annual fee
  • No foreign transaction fee
  • Cash-back rewards

Cons

  • Requires a minimum security deposit of $200
  • High APR 
  • Limited acceptance outside the U.S.

3. Best for Rebuilding Credit: OpenSky Secured Visa Credit Card

The OpenSky Secured Visa Credit Card doesn't require a credit check, bank account or minimum credit score. With a low annual fee of $35 and a reasonable variable APR of 22.39%, it's affordable. You can choose your credit limit between $200 and $3,000, based on your security deposit. Plus, it reports your activity to the major credit bureaus. Rebuilding credit can take time, but this can help.

Pros

  • No credit check and minimum credit score
  • Low annual fee
  • Reasonable regular APR

Cons

  • No rewards program
  • 3% foreign transaction fee

4. Best for Cashback and Rewards: U.S. Bank Cash+® Secured Visa® Card

The U.S. Bank Cash+® Secured Visa® Card offers great rewards, including 5% cashback on the first $2,000 spent quarterly in two chosen categories and 5% cashback on certain travel reservations. You'll also get 2% cashback on one everyday category and 1% cashback on all other purchases.

To start, make a refundable security deposit of $300 to $5,000, which also sets your credit limit. There’s no annual fee, and you can pick your payment due date, making it a convenient choice for building credit while earning rewards.

Pros

  • Generous cash-back rewards in flexible categories
  • No annual fee
  • Option to graduate to an unsecured card

Cons

  • High APR 
  • Requires a security deposit of at least $300
  • Foreign transaction fee of 3%

5. Best for Consumers With No Credit: Capital One Quicksilver Secured Cash Rewards Credit Card

The Capital One Quicksilver Secured Cash Rewards Credit Card presents a valuable opportunity for people with limited credit to build a positive credit history while enjoying rewards and financial flexibility. You can start with a minimum refundable deposit of $200, which becomes the credit line. The card offers 1.5% cash back on all purchases and a generous 5% cashback on hotel and rental car bookings through Capital One Travel without any caps. 

Also, there are no annual or foreign transaction fees, making it convenient for international use. After just six months, the card provides automatic credit line reviews and offers a pathway to upgrade to an unsecured version, allowing users to reclaim their deposits. 

Pros

  • Easy to qualify
  • No annual fee
  • Unlimited 1.5% cashback on eligible purchases

Cons

  • High APR
  • Low credit limit

What Causes Bad Credit?

Bad credit refers to a track record of failing to pay bills or repay loans on time. A bad credit score makes lenders concerned about the risk of repayment. The lower the score, the higher the lending risk — making securing loans, credit cards or renting an apartment tough or costly.

Various factors contribute to a bad credit score:

  • Payment history: This factor is the cornerstone of your credit score, comprising 35%. Lenders report payment delays or defaults to the credit bureaus, dragging down your score.
  • High credit utilization: When you use up a significant portion of available credit, it signals you may have repayment difficulties later on. Credit utilization accounts for a significant 30% of your credit score.
  • No, or very little credit history: Limited or no credit history means insufficient data to assess your creditworthiness. It contributes 15% of your score.
  • No credit mix: Lack of credit mix refers to not having diverse types of credit like credit cards or loans. Credit mix makes up 10% of your score, and a varied credit mix demonstrates the ability to manage different credit obligations effectively.

When to Use a Credit Card for Bad Credit

You might need a credit card for bad credit if:

  • Your credit score is below 579: Most lenders consider a credit score below 579 to be poor. This score can limit your approval chances for loans or mortgages. Some of the best cards for bad credit are secured cards, requiring a refundable security deposit. They can help you rebuild your credit score by showing that you can make on-time payments and use credit responsibly. 
  • You have a limited credit history: A limited credit history makes it difficult for lenders to assess your creditworthiness. Starter cards designed for those with no credit history can help establish a credit record. They typically offer features like credit education, automatic credit line increases and no annual fees.

What Is the Easiest Card to Get With Bad Credit?

When struggling with poor or no credit, you need access to cards that you can still qualify for. 

  • Secured credit cards: A secured credit card requires you to make a security deposit that acts as collateral and determines your credit limit. The deposit is usually refundable when you close the account or upgrade to an unsecured card. A secured credit card can help you build or rebuild your credit history if you use it responsibly and pay your bills on time. 
  • Store credit cards: A store credit card can only be used at a specific retailer or a group of affiliated stores. These cards tend to offer easier approval than regular credit cards, but they also have higher interest rates and lower credit limits.  

Should You Get Unsecured Credit Cards for Bad Credit?

Using an unsecured credit card for bad credit presents both opportunities and risks. While it can help rebuild your credit when managed responsibly, these cards often carry higher interest rates and fees with lower credit limits than standard cards.

High interest rates mean you could pay substantial finance charges if you maintain a balance. Also, annual application fees can quickly eat into your available credit.

These cards typically come with lower credit limits, making it challenging to control spending and maintain a low credit utilization ratio. However, using them responsibly — making timely payments and keeping balances low — can gradually enhance your credit score.

How to Choose a Credit Card for Bad Credit

The aim of getting a credit card for bad credit is to improve your credit score and financial situation. Here are things to look for:

  • Know your credit score: Before applying for a credit card, find out your credit score. You’ll have an idea of where you stand and which cards you may qualify for.
  • Look for issuers that report to the major credit bureaus: Ensure the credit card issuer reports your payment history to the major credit bureaus. These reports will help you establish a positive credit history over time — if you make timely payments.
  • Review credit card fees and other charges: Pay close attention to the annual fees, late payment fees, interest rates and other costs associated with the credit card. Settle for an affordable card that won't add unnecessary financial burden.
  • Look for credit-building features: Some credit cards for bad credit offer features designed to help you improve your credit score, such as credit monitoring tools, automatic credit limit increases and rewards for responsible credit behavior. Consider these features when choosing a card to maximize its benefits for your financial health.

How to Improve Your Credit Score

Follow these quick tips to nurture your credit score:

  • Regularly review your credit reports for errors and inaccuracies to safeguard your score.
  • Ensure on-time bill payments every month to uphold a positive payment history.
  • Maintain a low credit utilization ratio using less than 30% of your available credit.
  • Minimize new credit inquiries to prevent temporary score decreases.
  • Diversify your credit portfolio to build a robust credit history.
  • Keep old accounts open and address any negative items on your report to maintain creditworthiness.
  • Monitor your credit score regularly and use free credit-monitoring services for proactive management.

Finding Your Way with Bad Credit

These special credit cards offer a chance to rebuild your financial strength. Whether it's Capital One's Platinum Secured card or the rewards of U.S. Bank Cash+, each option helps you get back on track. Just remember to stick to your payments and spend wisely. With time, your credit score will rise, opening doors to new opportunities. So, pick the right card for you, use it responsibly and watch your credit improve step by step.

Frequently Asked Questions

Q

Can I get a credit card with a 500 credit score?

A

With a credit score of 500, qualifying for a traditional credit card may be tough. But options like secured credit cards are more accessible as they require a security deposit

 

Q

Can I get a credit card with really bad credit?

A

Even with really bad credit, you can get secured credit cards, which require a deposit and are designed for people looking to rebuild their credit.

What

Q

When is the easiest unsecured credit card to get with a 500 credit score?

A

For people with a 500 credit score, securing an unsecured credit card can be tough, but some issuers offer unsecured cards created for those with poor credit. They come with potentially higher fees and lower credit limits.