A bad credit score, typically considered to be below 580, can severely limit access to various financial products, including credit cards, loans, and mortgages. But all is not lost. There are specific credit cards designed exclusively for individuals with poor credit. These specialized cards can be a vital tool in building credit with a credit card designed for recovery.
While these cards often come with higher interest rates and lower credit limits, they provide an opportunity to demonstrate responsible credit usage. Individuals can gradually build credit by making timely payments, maintaining low balances, and adhering to the terms of the credit agreement.
This blog explores credit cards for bad credit and how to build credit with them, delving into the features, benefits, and other details of these credit cards. Let’s dig deep.
Read More: Before we get into the nitty-gritty, are you facing a bad credit score? These topics can be your roadmap to financial recovery
- Credit Crisis Alert: Is Your Score in Danger Zone?
- Can I Buy a House with Bad Credit?
- Fix Bad Credit: 7 Field-Tested Strategies to Transform Your Financial Future
What are Credit Cards available for a bad credit score?
Here are the top 5 best Credit Cards available for a bad credit score:
- Capital One Platinum Secured Credit Card
- Credit One Bank® Unsecured Visa® with Cash Back Rewards
- Navy Federal nRewards® Secured Credit Card
- Indigo® Platinum Mastercard®
- Commerce Bank Secured Visa® Credit Card
5 Best Credit Card Options for Bad Credit Scores
1. Capital One Platinum Secured Credit Card
The Capital One Platinum Secured Credit Card is designed to assist individuals with limited or bad credit in building their credit history. With no annual fees and a variable APR of 26.99%, this card offers a pathway to build credit with credit card through responsible usage.
The required security deposit ranges from $49 to $200, and it can be paid in one or multiple payments. The card's features include free balance transfers at the transfer APR, fraud protection, and the potential for a higher credit limit after six months of responsible use.
Features:
- Penalty APR: None
- Credit Needed: Limited and Bad
- Balance Transfer Fee: $0
- Annual Fee: $0
- Cash Advance Fee: $10 or 3%
- APR: 26.99% variable
- Foreign Transaction Fee: None
The card's transparent fee structure and the opportunity to build credit make it a sensible choice for those seeking to improve their credit score. Ready to build credit with credit card designed for recovery? The Capital One Platinum Secured Credit Card is designed for you.
2. Credit One Bank® Unsecured Visa® with Cash Back Rewards
The Credit One Bank Unsecured Visa with Cash Back Rewards is tailored for customers with bad credit looking to build credit, offering 1% cash back on qualifying purchases like gas, groceries, and telecom services. The card's annual Fee ranges from $0 to $99, depending on the cardholder agreement.
With an APR of 17.99% to 23.99%, this card provides benefits such as access to FICO credit scores, zero-dollar fraud liability, and the possibility to build credit through credit line increases. Pre-qualification is available, allowing potential cardholders to check their eligibility without hard credit checks.
Features:
- Penalty APR: N/A
- Credit Needed: Good
- Balance Transfer Fee: N/A
- Annual Fee: $0 - $99
- Cash Advance Fee: $5 or 8%
- APR: 17.99% to 23.99%
- Foreign Transaction Fee: $1 or 3% for purchases in U.S. Dollars
The card's cashback rewards and credit-building features make it an appealing option. Want to build credit and consolidate debt while earning rewards? The Credit One Bank Unsecured Visa offers cashback rewards. Learn more
3. Navy Federal nRewards® Secured Credit Card
The Navy Federal nRewards Secured Credit Card is designed to help cardholders build credit with credit card. With no annual fee and a $200 minimum security deposit, this card offers a flat 1 point for every dollar spent on purchases.
The APR is variable at 18.00%, and there are no fees for balance transfers or foreign transactions. Additional benefits include access to free FICO credit scores, cell phone protection, and the ability to redeem points for merchandise, cash, or statement credit. This card is a valuable tool for those looking to build credit while earning rewards.
Features:
- Penalty APR: 18%
- Credit Needed: Poor/Limited History
- Balance Transfer Fee: N/A
- Annual Fee: $0
- Cash Advance Fee: None at Navy Federal ATMs or branches; $1.00 for foreign transactions, $0.50 for domestic
- APR: 18.00%
- Foreign Transaction Fee: None
The card's rewards program and credit-building features make it a strong option. Build your credit and earn rewards with the Navy Federal nRewards Secured Credit Card.
4. Indigo® Platinum Mastercard®
The Indigo Platinum Mastercard by Genesis FS Card Services is tailored for individuals with bad credit aiming to build credit. With an APR of 24.90% and an annual fee ranging from $0 to $99, this card offers minimal frills but provides essential benefits. It doesn't require a deposit to get a credit line, and pre-qualification is fast without impacting your credit score.
The card also offers unique features like custom credit card design, extended warranty coverage, roadside assistance, emergency assistance, travel assistance, and rental car insurance. Though it doesn't offer rewards on purchases, responsible management can help build credit.
Features:
- Penalty APR: N/A
- Credit Needed: Bad/Poor
- Balance Transfer Fee: N/A
- Annual Fee: $0-$99
- Cash Advance Fee: N/A
- APR: 24.90%
- Foreign Transaction Fee: N/A
5. Commerce Bank Secured Visa® Credit Card
The Commerce Bank Secured Visa Credit Card is designed to build credit with credit card for those with poor or no credit. With an APR of 18.24% and an annual fee of $49, this secured card requires a deposit equal to the credit limit, which also earns interest in savings accounts.
Cardholders have access to free monthly FICO credit scores, credit reporting to all three bureaus, and zero fraud liability. Additional features include digital wallet technology, card lock, and text alerts. This card offers a practical solution for credit card debt consolidation and building credit.
Features:
- Penalty APR: None
- Credit Needed: Lack of History/Little/Poor
- Balance Transfer Fee: None
- Annual Fee: $49
- Cash Advance Fee: None
- APR: 18.24%
- Foreign Transaction Fee: 1% for transactions in U.S. Dollars, 2% for transactions in foreign currency
Credit Card Features to Look for with Bad Credit
When selecting a credit card with bad credit, key features to build credit include low or no annual fees, reporting to all three major credit bureaus, and educational resources to help with credit management.
Some cards may also offer free credit score tracking or incentives for responsible use. These features can support individuals in their journey to improve their credit scores and financial stability.
Rebuilding Credit After Bankruptcy or Financial Hardship
Building credit with a credit card after bankruptcy or significant financial hardship is a challenging but achievable goal.
Credit cards designed for those with poor credit can be a valuable tool in this process. By using the card responsibly, making timely payments, and keeping balances low, individuals can gradually rebuild credit score with credit card. Secured credit cards, in particular, may offer a more accessible option, allowing for controlled spending and a clear path to credit recovery.
Understanding Secured vs. Unsecured Credit Cards
1. Secured Credit Cards
Secured credit cards are designed for individuals with bad or no credit history. They require a security deposit, which typically equals the credit limit. This deposit acts as collateral, minimizing the risk for the issuer.
If the cardholder defaults on payments, the issuer can use the deposit to cover the outstanding balance. Secured cards often come with lower fees and interest rates, making them an attractive option for credit card debt consolidation and building credit.
Over time, responsible use of a secured card can lead to an upgrade to an unsecured card.
2. Unsecured Credit Cards
Unsecured credit cards do not require a security deposit. They are generally available to individuals with fair to excellent credit scores.
Approval for an unsecured card usually requires a review of the applicant's credit history, income, and other financial factors.
Unsecured cards may offer rewards and other benefits but often come with higher interest rates and fees compared to secured cards. They may be more challenging to obtain for those looking to build credit with bad credit.
Conclusion
Navigating the world of credit cards for bad credit doesn't have to be overwhelming. By understanding the options available, such as secured, subprime, prepaid credit cards, and credit union credit cards, you can find the right fit for your financial situation. Each option has its unique benefits and potential risks, and careful consideration is essential.
Implementing responsible usage strategies like making timely payments, keeping low balances, and avoiding new credit inquiries can help you build your credit score. Exploring debt consolidation options, such as personal loans or balance transfer cards, can simplify payments and potentially lower interest rates.
Still unsure about the best credit card for your situation? Schedule a free credit consultation with our experts. Contact us and let us guide you to the perfect credit card for your financial comeback.
Why Bright Money?
Bright Money offers a suite of innovative financial products designed to assist individuals in rebuilding their credit and achieving financial wellness. Bright Plan is at the forefront of these offerings, a comprehensive financial planning tool that empowers users to create personalized budgets, track spending habits, and set achievable financial goals. Bright Plan helps users make informed decisions to improve their credit standing by providing actionable insights and recommendations based on individual financial circumstances.
Bright Builder, another flagship product, is specifically tailored to help users establish and build their credit history. Through responsible use of Bright Builder, individuals can gradually build positive credit activity, leading to improved credit scores over time. Moreover, Bright Money offers educational resources and personalized coaching to support users' credit-building journey. By combining cutting-edge technology with expert guidance, Bright Money provides a holistic approach to financial wellness, empowering individuals to take control of their finances and build a brighter future.
In addition to Bright Plan and Bright Builder, Bright Money offers Bright Credit, an innovative tool designed to further enhance users' credit-building efforts. Bright Credit provides personalized strategies and insights to help users optimize their credit utilization, manage credit inquiries, and strategically improve their credit score over time. With Bright Credit, users can take proactive steps towards achieving their financial goals and securing a brighter financial future.
Further Reading
- What are some Credit Builder Loans Which can Give Money Upfront?
- How Does a Credit Builder Loan Build Credit?
- 6 Crucial Factors for Your Credit Builder Loan Decision!
FAQs
1. Can I Improve My Credit Score with a Store Credit Card?
Yes, store credit cards can be used to improve a bad credit score. They often have more lenient approval requirements, making them accessible to those with poor credit. By using the card responsibly and making timely payments, you can build a positive credit history. However, store credit cards often come with higher interest rates and limited usability, so it's essential to understand the terms before applying.
2. What Happens If I'm Denied a Credit Card Due to Bad Credit?
Being denied a credit card can be disheartening, but it's not the end of the road. You'll receive a letter explaining the denial reason, which can provide insights into what areas of your financial profile need improvement. Consider secured credit cards or credit-building loans as alternatives, and focus on improving the factors that led to the denial.
3. Can I Negotiate the Terms of a Credit Card with Bad Credit?
While it's uncommon, some credit card issuers may be open to negotiating terms such as interest rates or annual fees, especially if you have a history with the bank. It doesn't hurt to ask but be prepared with a clear understanding of what you're seeking and why it's justified.
4. How Can I Protect Myself from Scams Targeting Those with Bad Credit?
Individuals with bad credit may be targeted by scams offering "guaranteed" credit card approval. Protect yourself by researching the issuer, reading reviews, and understanding the terms before applying.
References
https://www.mastercard.us/credit-type/bad-credit/
