Comparing options for the Best Credit Cards for Bad Credit
Credit history is among the factors that lenders consider in determining the consumer’s creditworthiness. If you have a history of paying bills late, there is no doubt that your credit score will reduce and this will portray you as a risky borrower. Such a situation can be stressful. Luckily, you can still regain your financial health using a credit card. Once you apply for the right credit card, your credit rating will improve within a few months. But the main challenge for consumers who want to improve their credit rating using credit cards is knowing how exactly to do it. In this credit cards review, you will know exactly what to do, how to do it and some of the challenges you may face along the way. The criteria used in coming up with the best credit cards for bad credit include the credit needed, annual fee, deposit fee, customer service among others. Here is a short explanation of why this information was used:
- Credit Needed
This is one of the most important factors when coming up with the best credit card for bad credit. To qualify for a credit card, you should be in a specific FICO score category depending on the card features and more.
- Deposit required
There are also some credit cards that require a refundable deposit. These are referred to as secured credit cards. This deposit acts as your credit line limit and is usually refunded within a few months of making full and timely payments.
- Hidden fees
Some credit card issuers have few fee charges, but there are also others that charge a fee in almost every step in the application process.
- Annual fee
Some credit cards charge an annual fee while others don’t. The latter can be a good option, but if only there are no other charges.
- Regular APR
This is the APR that consumers pay when they carry a balance.
- Customer service
Some of these credit cards offer 100% online service while others only offer their service in specific locations in the United States.
A review of the best credit cards with bad credit 2018
- Discover It® Secured Credit Card
The card is issued to consumers with bad credit, but it also comes with a number of rewards. This includes 1% cash back on all purchases made using the credit card and 2% cash back on restaurants and gas stations up to $1000 in combined purchases each quarter. The card requires a refundable deposit of at least $200 and a maximum of $2,500, which also acts as your credit line limit. After 8 months, your account is reviewed to determine whether you qualify for an unsecured account. The card has an APR of 24.99% variable. Some of the benefits of Discover It® Secured credit card include:
- There is no annual fee
- You get double cash back after using the card for at least one year
- Responsible use can help improve your credit score
- You will receive free social security number alerts
- Capital One® Secured Mastercard
When you apply for Capital One® Secured Mastercard, you will get an initial $200 credit line. The card does not have an annual fee and you can qualify for a higher credit line with no additional deposit required after using the card for 5 months and making your monthly payments on time. A refundable security deposit of $49, $99 or $200 is required based on the consumer’s creditworthiness. It also offers a variety of retail and travel benefits which includes extended warranty protection and no foreign transaction fees. Additionally, you can manage your account 24/7 using Capital One Bank mobile app. The card has an APR of 24.99% variable on purchases.
- Credit One Bank® Visa® Credit Card
The card offers 1% cash back on grocery, gas and other purchases for mobile phone, satellite TV, cable and internet. An annual fee is charged depending on the consumer’s profile. You will get a credit line ranging from $300-$3,000 depending on your credit history. Once you apply for the card, you will get a copy of your Experian credit report every month. The card has an ongoing APR of 19.75%-25.74% variable. It can be a good option when you want to rebuild your credit history. Other benefits of Credit One Bank® Visa® credit card include:
- Consumers are allowed to pick their monthly due date
- You can set custom emails and alerts to act as reminders of your due date
- You will also be notified if your available credit is low
- Offers 0% fraud liability
- Easy access with Credit One Bank mobile app
- Total Visa® Unsecured Credit Card
This is also among the best credit cards for bad credit, and it can also help improve your credit score after using it for a few months. It has a credit limit of $300. There is no deposit required and applicants are required to have a checking account. The card has an APR of 29.99%. There is also a one-time processing fee of $89 charged when opening the account. The main advantages of this card are:
- You can be approved in as little as 60 seconds
- Has an easy online application
- Manageable monthly payments
- credit line increase opportunities
- No security deposit
- Credit One Bank ®Unsecured Visa® with Cash Back Rewards
The card is unsecured and does not require a deposit. Consumers can also see whether they qualify for the card, and this won’t have an effect on your credit score. Once you are approved for the card, you get 1% cashback on gas and grocery expenses. The card has an APR of 19.74-24.74% variable. It is also among the best cards to consider when you want to improve your credit. Some of the benefits of the card include;
- Zero fraud liability
- Online access by phone using Credit One Bank mobile banking app
- Applicants can choose from different card designs
- Your account is evaluated periodically to see if you are eligible for a higher credit line
The above banks are among the best options for consumers with bad credit, but they also not the only available option. Other best credit cards for bad credit include:
- CITI ® Secured Mastercard®
This secured credit card is also a good option for consumers with poor credit. The card has 0% annual fee. It requires a minimum deposit of $200 and a maximum of $2500. It can work well for consumers who are still new to credit cards than those who are trying to regain their financial health from past credit mistakes. CITI® Secure Mastercard® does not offer rewards, but it has several other benefits including travel accident insurance, purchase protection, rental car insurance, and extended warranty coverage. The card has an interest rate of 23.99% variable on purchase and balance transfer.
- BankAmericard® Secured Credit Card
With the card, you can qualify for a higher credit line. It has a minimum deposit requirement of $300 and a maximum deposit of $4900. If the card is used responsibly for one year, your account will be reviewed and your security deposit may be returned. The card has an annual fee of $39 and ongoing APR of 21.74% variable.
- Wells Fargo Secured Visa Card
The card offers a high credit limit of $300 minimum and $10,000 maximum. With responsible use, you can qualify for an unsecured credit card. Wells Fargo Secured Visa Card has an annual fee of $25 and the ongoing APR is 20.49% variable.
- GreenDotprimor® Visa ® Gold Secured Credit Card
With the card, you can access credit line of between $200 and to $5,000. The card has a fixed interest rate of 9.99% on purchases. It has no penalty rate, no processing or application fee and no minimum credit score requirements. Responsible use of the card can also help improve your credit score. Besides, the card has a fast and easy application process.
- Indigo ®Platinum Mastercard
Consumers with less than perfect credit can also qualify for the Indigo®Platinum Mastercard®. With the card, you are allowed to choose your custom card design free of charge. The account history is reported to the major credit bureaus, which helps improve your credit score. The card has a fast and easy application process and you can also manage your account 27/7 with online access. It has an APR of 23.90% on purchases. The card also offers protection from fraud in case it gets stolen or lost.
- Milestone® Gold Mastercard ®
The credit card offers quick prequalification which will not have an impact on your credit score. It has a simple application process and just like the Indigo ®Platinum Mastercard ®, you can choose your custom card design free of charge. Once you apply for the card, you can easily manage your account online. You can qualify for the credit card if you have a bankruptcy history. The card offers zero fraud liability. It has an APR of 23.9%.
Besides having a fast and easy application process, your account is also reviewed periodically to determine whether your credit line can be increased. Just like other credit cards for bad credit, your credit score will improve when you use your card responsibly. The card offers zero fraud liability and has an APR of 20.90%.
- OpenSky ®Secured Credit Visa® Card
This card requires a refundable deposit starting from $200. This deposit becomes your credit line limit. The card reports to all the three major credit bureaus and this will help build your credit card quickly. The OpenSky website has a credit education page which provides information on how to manage finances. It has an APR of 19.14% variable.
- First Progress Platinum Select Mastercard ®secured credit card
The card can be used for hotel expenses, car rentals and any other place where credit card is accepted. It has a fast application process, meaning that you will receive your card more quickly. There are no minimum score requirements. A refundable deposit of between $200 and $2000 is required and the amount submitted becomes your credit line limit. You can also manage your account 27/7. The card has a variable APR of 20.24% and an annual fee of $29.
What is bad credit?
If your score is less than 580, then this is considered as bad credit. On the other hand, good credit is FICO score of 700+. For consumers with bad credit, you may not qualify for affordable rates and your credit limit may also be low. As much as this comes as bad news to such consumers, it takes only a few months to rebuild your credit using a credit card. But once your credit score improves, ensure to maintain it since one missed payment can greatly affect your credit score.
Tips to improve your credit score
If you have poor credit, there are a number of things you can do to make you an attractive borrower. If you do it correctly, it will only take a few months for the score to improve. These include:
- Confirming if your credit report has errors
The information in your credit report is what credit bureaus use to determine your credit score. If there are mistakes or inaccuracies in your credit report, you can have it changed before applying for a credit card.
- Check your credit score
Once you know your credit score, you can access the types of lending products or credit cards that you qualify for.
- Take out a credit card
Among the easiest ways to improve your credit is by signing up for a credit card and using it every month.
- Avoid applying for multiple cards
Every time you apply for a new credit, your credit score drops, usually by five points. If you apply for multiple credit cards, lenders may see you as a consumer who is desperate for cash.
- Use your credit card every month
If you apply for a credit card, it will only benefit you when used more frequently. Ensure you use the cards to pay bills every month so as to improve your credit.
- Make timely payments
This is one of the best ways to ensure that your credit score improves
Remember that to improve your credit score; you first need to know the cause of bad credit. Accumulating too much debt and frequent late payments are usually the main causes. You can also work with a non-profit counselor to know how to manage your debt and improve your credit score.
Things to look for in a credit card if you have poor credit
If you have bad credit and need a credit card, don’t despair. There is always an option available to consumers with either good or poor credit. You only need to ensure that you apply for the right type of credit card. Credit cards that are available to people with poor credit have almost the same features as those reserved for people with good credit. But these cards also have specific features tailored to consumers who do not have the best credit history. Here are some of the things to look out for in the best credit cards for bad credit;
- Bank account requirements
Some credit cards may require you to have a checking account while others don’t. This requirement may not help in improving your credit, but it can also indicate that you have managed your finances.
- Does it allow you to prequalify?
If it does, it is a great way to find out if you can get the credit card without affecting your credit score. Hard pulls may have a negative impact on your credit score, but there are also cards with quick prequalification which will not affect your credit score.
- What are the fees involved?
Accounts opening fees, maintenance fees and other fee charges can increase the total costs involved. There are also credit card issuers who charge other hidden fees like an increase in the annual fee from the second year. It is therefore important that you carefully go through the terms and conditions before applying for the credit card.
- Does the issuer report to the credit bureaus?
Most credit card issuers report consumer information to the three major credit reporting agencies. But it is also important to check, just to be sure.
- Are there rewards?
Some credit cards like the Credit One Bank® Unsecured Visa with cash back rewards offer rewards to consumers. This includes 1% cash back rewards on grocery, gas and other services for cable, internet, mobile phone, and satellite TV. Discover It® Secured is also available for people with bad credit and offers 2% cash back at restaurants and gas stations
Secured vs. unsecured credit cards
Having poor credit is just a stage in the consumer’s financial life, and it is not intended to harm you forever. In fact, most credit cards that qualify consumers with bad credit can also be used to build your credit rating. The two main types of credit cards for bad credit are secured and unsecured cards
- Secure credit cards
If you apply for a secured credit card, you will be required to provide a refundable deposit. This amount is usually the same as your credit limit. The cards can also be used to build credit, provided the issuer reports your credit behavior to the major credit bureaus. This is how a secured credit card works;If for instance, you pay a refundable deposit of $200, you can borrow the same amount of money on your card. But there are also secured credit cards that require applicants to have a bank account. The card can be used to make purchases both in store and online. Some of them also offer rewards. After making timely payment for 6-12 months, you can get your deposit back and you can also gain access to a higher credit limit.Unsecured credits cards are also known as rewards credit card. The cards can be used to build your credit and do not require security deposits. Some of the features of unsecured credit cards include:
- Low credit limit
- Small cash back benefits
What if you miss your payment?
Once you get a new credit card, it is advisable that you make full and timely payment every month. If you do not pay on time, you may be charged a late fee and your purchase APR might also increase. Missing payment repeatedly can also cost your account. Besides, late payment can have a negative impact on your credit score and this may not be good news especially for consumers who want to build their credit. Once you miss a payment, it is important to notify the card issuer immediately. Explain what led to the issue and both of you can come up with a payment plan. By doing so, they can even waive the late fee or your late payment may not be reported to credit bureaus.