Credit Cards for People with Bad Credit

Millions of Americans are in debt, struggling with basic finances and worrying about how they can put food on the table. We live in a society built on credit, where your total worth as a human being is reduced to a series of numbers on a screen, and if you have bad credit then you’re at a huge disadvantage.

One of the biggest issues that borrowers with bad credit face is acquiring a credit card. 30% of your credit score is based on credit card debt, so not only can a bad history with these cards destroy your score, but if you can’t acquire one then it’s going to be difficult to build that score up. In this guide we’ll look at credit cards for people with bad credit, seeing what your options are, how you can avoid high interest cards, and more.

Unsecured vs Secured Credit Cards

There are two types of credit cards for people with bad credit: secured and unsecured. Before you look for one that is right for you, it is important to understand how these differ. Fortunately, it’s quite straightforward.

A secured credit card is a card limited by the cash advance that you pay at the time of securing the card. These cards can be used to turn cash into electronic payments and benefit from the convenience and the security of a card without relying on large amounts of credit. You can add to the deposit to increase the available credit on the card and if you are able to show that you are a good borrower, one that makes regular payments and holds the card for an extended length of time, then you may even get an amount of credit that goes beyond your deposit.

An unsecured credit card requires no deposits and offers a line of credit based purely on the borrower’s credit history. If you have a good credit score then you should not have an issue securing a card like this, although the worse that your credit score gets, the more restrictive the card will be, with reduced limits and higher interest rates.

The Best Credit Cards for People with Bad Credit

The best thing you can do if you have bad credit is avoid taking out unsecured credit cards and focus on building up your credit score. We know this isn't easy and we know some of you will have already gone down that route, so feel free to skip ahead if so, but if not, try the following tips:

  • Build Your Score: There are many things you can do to improve your credit score. Our guide on repairing credit scores help with this.
  • Pay Off Debts: If you can pay off any of your debts before looking for a credit card for bad credit, do so, because your options will greatly improve if you do.
  • Use a Secured Card: It won’t give you bundles of credit and it won’t be as convenient, but it can give you some of the benefits and help you to build your credit score.
  • Start Small: Many borrowers with no credit history assume they can jump straight to a credit card with a high limit. But no credit is just as restrictive as bad credit in the eyes of the bank. So get a credit with whatever limit they offer you, make sure you pay it off every month and that limit (and your credit score) will rise.

Best Secured Credit Cards for Bad Credit

Secured Credit Cards Bad Credit

These options are based purely on our opinions at the time of writing. Options change and while we try to update, it’s not always possible for us to keep track. So please bear that in mind and look through the terms and conditions before agreeing to any of the following.

Discover It Secured Card

This is a credit card for bad credit that offers borrowers an easy way to get a Discover credit card. There is a security deposit required, but this is refundable and they have a respectable APR of just under 25%. There is also a reduced rate to pay if you opt for the balanced transfer option.

There are a few special features here as well, ones that you typically only find on unsecured credit cards and credit cards not reserved for people with bad credit, such as the chance to earn 2% cash back at gas stations. Also, if you meet your repayments on time every month then you may be able to transition into an unsecured card.

What You Need to Know

  • 24.49% APR Variable.
  • Reward schemes to earn cash back.
  • Fraud monitoring service available.
  • Account will be reviewed after 8 months to see if you are eligible to receive an unsecured card.

Capital One Secured MasterCard

Capital One have some great options for borrowers with poor credit, as described in our guide to bad credit car loans. This card has all the benefits of a prepaid card, including no annual fee and the ability to use it online and offline. But it also operates much like a standard credit card and lets you build your credit steadily.

Assuming you use it responsibly that is, because if you don’t then it is not going to do you any favors.

What You Need to Know

  • Regular reporting to 3 major credit bureaus.
  • 24.99% APR Variable.
  • Initial credit line of $200 after deposit of $49, $99 or $200.
  • Access to better credit when you make your first 5 monthly payments.
  • Online account management.
  • Mobile app.

Best Unsecured Credit Cards for Bad Credit

Unsecured Credit Cards Bad Credit.jpg

As above, make sure you look through the terms of these credit cards for bad credit as they have a tendency to change and they may also not suit your circumstances.

Credit One Bank Unsecured VISA

This is a generous reward card that has a super quick and easy sign-up process, promising to have you in-and-out within 60 seconds. What’s more, it won’t affect your credit score, which is essential if you’re applying with bad credit that you can’t afford to drop any further.

What You Need to Know

  • Get 1% cash back on purchases of things like groceries and gas, as well as utility bills.
  • 17.49% to 25.49% APR variable.
  • Annual fee of between $0 and $99.
  • Fraud protection with no liability if you lose your card to fraud.
  • You can manage your account online and on the app.
  • Comes with over 20 colorful designs to choose from.
  • Free access to your credit report via Experian.

Total VISA Unsecured Credit Card

You will need a checking account to apply for this, but it is aimed at borrowers with limited credit or bad credit and tends to be very accepting. The annual fees and APRs differ depending on your personal circumstances.

What You Need to Know

  • Can be used anywhere VISA is accepted.
  • Reports to all major credit bureaus.
  • Easy, manageable monthly repayments.
  • Quick application.