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If you're a consumer with bad credit (a FICO score between 300 and 579) or with a limited or nonexistent credit history, finding the right card can be tricky. You want to limit your risk of rejection, which can bring down your credit score even further, but many credit cards that promise easy approval are laden with high fees.
Fortunately, there are plenty of affordable options for building credit. Based on our research of cards available through ValuePenguin, as well as top cards offered by major issuers, we’ve compiled a list of the best credit cards for bad credit. These include both secured and unsecured cards that can help you build your credit history without incurring a lot of fees. We also offer tips for applying and using these cards.
Best credit cards for bad credit 2020
Continue reading for a detailed look at the benefits and features of each recommended credit card.
Best credit card to build credit
Secured Mastercard® from Capital One
For cardholders attempting to establish a credit history or boost a dwindling credit score, the Secured Mastercard® from Capital One is our top choice. There are many reasons it's great for building credit: It doesn't charge an annual fee, the security deposit is fairly low and you get the chance to increase your credit line in just six months. Plus, it includes solid benefits for an entry-level card.
- Low security deposit required. You can open an account with just $49-$200 (depending on your credit score).
- No fees to upkeep it. Once you put down your deposit, you don't have to worry about paying an annual fee, making the Secured Mastercard® from Capital One a keeper for the long run.
- Automatic account reviews. Capital One will review your payment history within six months, and upgrade you to a higher credit line if you've made payments on time, potentially boosting your credit score.
- No penalty APR. The Secured Mastercard® from Capital One doesn't have a penalty APR, so you won't get zinged with a sky-high interest rate in case you miss a payment.
- Use CreditWise to monitor your score. Capital One's CreditWise service is a handy tool to track your progress with your credit score and monitor your credit report.
- Other card benefits. It offers good benefits for an entry-level card, including extended warranty, car rental insurance and no foreign transaction fees.
- The APR is high. A note of caution: The Secured Mastercard® from Capital One charges a higher APR of 26.99% (Variable). You should avoid carrying a balance with this card.
- No rewards program. If you're hoping to earn cash back or rewards for travel, you're out of luck with the Secured Mastercard® from Capital One. It doesn't have a rewards program.
- For rates and fees of Secured Mastercard® from Capital One, please click here.
Best credit card with no credit check
OpenSky® Secured Visa® Credit Card
For consumers seeking an easy-to-qualify card with a speedy application process, the OpenSky® Secured Visa® Credit Card is a decent option. There are much better cards on this list, but for a card that doesn't require a credit check, the OpenSky® Secured Visa® Credit Card has reasonable terms that don't overburden you with fees.
- No credit check required. OpenSky doesn't check your credit when you apply, which means no hard inquiry on your credit report.
- The fees are reasonable. Besides the card's annual fee and fees for not keeping it active (more on that below), you don't have to worry about costly maintenance fees.
- Reasonable APR. All cardholders are approved for the same APR of 17.39% (variable) Variable.
- You have to pay a $200 deposit. Though not unreasonable compared with other secured cards, the OpenSky® Secured Visa® Credit Card does require a deposit.
- There's a $35 annual fee. On top of your deposit, you'll have to pay a $35 annual fee each year.
- No rewards. It's a bare-bones card with few benefits and no rewards program.
- You get charged a fee if your card is inactive. You'll need to be especially careful to use your card regularly. You can be charged as much $10 per month if your card becomes inactive.
Best secured card for bad credit
Discover it® Secured
The Discover it® Secured is our favorite secured credit card (and one of our favorite cards for consumers with low credit scores, period). That's because it offers a great cash rewards program, similar to the type of offers usually reserved for consumers with better credit. Also, Discover gives you a quick path to upgrading to an unsecured card with responsible credit usage.
- Good rewards program. You earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically.
- Cash back matched in your first year. At the end of your first year of membership, Discover will match the cash back that you earned, essentially doubling your rewards.
- Account review at eight months. Discover performs regular account reviews starting at eight months. If you make all your payments on time, you may be upgraded quickly to an unsecured card.
- You have to pay a $200 deposit. Unfortunately, you have to have enough money on hand to fund the card. But, you will get the deposit back if you manage the card well, plus the rewards will pay you back in time.
- For rates and fees of Discover it® Secured, please click here.
Best credit card for students
Discover it® Student Cash Back
For college students seeking to build their credit scores, the OpenSky® Secured Visa® Credit Card is our favorite student card. The card entitles you to the same cashback rewards program as Discover's prime cashback card — The Discover it® Cash Back. It even rewards you at the end of the year for earning good grades.
- No security deposit required. This is an unsecured card, so you don't have to worry about coughing up the funds for a security deposit.
- Great rewards program. You Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically..
- Matches your cash back in the first year. Even better, Discover will match any cash back you earn in your first year, doubling the rewards that you earn.
- $20 statement credit for good grades. If you earn a 3.0 or higher, Discover will reward you with a $20 statement credit at the end of the year, for up to five years.
- Only available to students. You need to be enrolled in college to be eligible for this card.
- May be a little harder to qualify for. While the Discover it® Student Cash Back card is targeted to students with limited credit histories, you may have a harder time getting approved than with a secured card. But, you can see if you're preapproved on Discover's website to lower your odds of rejection.
- Requires some maintenance. In order to Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
The information related to the Secured Mastercard® from Capital One, OpenSky® Secured Visa® Credit Card, Discover it® Secured and Discover it® Student Cash Back has been collected by ValuePenguin and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply.
What is a bad credit score?
FICO Score ranges
How to pick a card for building credit
When picking out a card to build your credit score, you'll want to look for a card that you can qualify for with bad credit that won't charge exorbitant fees. Here are the key features to consider:
Secured vs. unsecured
Should you plunk down a deposit to open a secured card or should you search for an unsecured card? While a secured card will require a significant investment upfront (around $50-$200), you may find that you pay less in the long run than with many of the unsecured cards available for consumers with bad credit. The latter often come with many hidden fees.
Speaking of credit card fees, you should take a very close look at the terms and conditions of each card before you apply. Cards geared toward consumers in the lower credit ranges are often teeming with fees that can make them extremely costly to own — more than $100 per year, in some cases. This isn't just a problem in the short term, but also a huge liability in the long run if you want to maintain the account to boost your credit score. You'll want to avoid such cards if you can.
The next feature to keep a close eye on is the card's APR — in other words, the amount of interest you'll be charged for carrying a balance. Most of the cards in this range have a high APR — it's almost impossible to avoid. However, try to find one with a lower APR if you can, and plan to avoid carrying a balance. Also watch out for cards with penalty APRs. Some cards may raise your APR as high as 30% if you miss a payment.
You should also look for cards that offer features to help you build your credit score. These can include guaranteed account reviews with upgrades to higher limits or better cards, and services that help you monitor your credit. You should also make sure the card reports to all three credit bureaus.
If you can find a card that helps you build credit and offers points or cash back, that is the cherry on top. Be sure to look for rewards that are easy to redeem (such as cash back) and that match your spending habits.
Long term value
Since your credit score improves with the age of your accounts, it's best to look for a card that you want to keep for the long term. Search for cards that aren't going to charge you a lot of fees year after year, and that offer benefits and rewards that make them worthwhile.
Other card options from same issuer
You should also see if the card's issuer has better cards for you to upgrade if you keep your payments timely.
How to get a credit card with bad credit
Applying for a card with bad credit can be especially tricky, since you face a high chance of rejection, which can further reduce your credit score. Here are some tips for improving your odds of approval:
- Know your credit score. Before you start your search, find out what your credit score is. There are many websites that offer free credit scores.
- Find a card that matches your score. Do a search online to make sure a card is geared to consumers in your credit range before you apply.
- See if you're preapproved. Many issuers offer forms on their sites that let you check for preapproved offers without a hard inquiry. There's no guarantee you'll be approved if you apply, but you have a much better chance of approval for these cards.
- Don't apply for too many cards at once. While you may be tempted to send out many applications at once, you should avoid doing so. This can send out a big red flag to issuers, lowering your odds of approval even further, and it can cause a dip in your credit score.
- Ask for reconsideration if you're rejected. Call the issuer and ask them to take a second look at your application — if it's a minor issue, they may be able to resolve it and send your application through.
- Try applying in-person through your bank. Your banker can help you fill out the application and may be able to call the reconsideration line for you if you're rejected.
- Build your credit before applying. You may also try bolstering your credit before you apply. Make sure all your payments are timely. Consider trying a free service such as Experian Boost that can increase your credit score. You could also have a family member add you as an authorized user to a card with a good payment history, to give your credit history an instant boost.
How to use a credit card to build your credit
A credit card can be a great tool for building your credit history when used responsibly. Here are some tips for making the most of your new card:
- Use it each month. To establish a history of timely payments, you'll need to use the card regularly. Put at least a small charge on it each month. You might consider adding a small repeating charge to it (like a gym membership) and setting it to autopay.
- Don't charge too much. On the other hand, you don't want to go overboard with your new card, especially when you're just starting off with a small credit limit. The general recommendation is to keep your balance under 30% of your credit limit (for a card with a $300 limit, this would be $90).
- Pay off your card in full and on time each month. This tip is crucial — be sure to make your payments on time each month. A single missed payment can send your score tumbling in the wrong direction. Most issuers offer autopay features to help you keep on track.
- Use the issuer's tools to track your progress. If your issuer offers tools for monitoring your credit score, make use of them. You can see if your credit score is moving in the right direction and monitor changes to your credit report.
- Request a credit limit increase or card upgrade. After a year of making timely payments, ask your issuer if they will increase your credit limit or upgrade you to a better card. A higher credit limit will further lower your credit utilization ratio and should help increase your credit score.
FAQs about credit cards for bad credit
What is the easiest credit card to get with bad credit?
Which credit cards offer instant approval?
Do any credit cards offer guaranteed approval?
Some issuers tout guaranteed approval, but their terms are usually awful, full of expensive fees. With some of these cards, you don't even know what kind of terms you will get (including fees) until your account is open. In general, you're better off avoiding these cards and looking for a secured card with reasonable fees.
What is the best gas credit card for bad credit?
Gas credit cards generally require good to excellent credit to apply.
What are the best credit cards after bankruptcy?
What is the best Capital One credit card for bad credit?
Are there preapproved credit cards for bad credit?
In fact, many issuers, including Credit One, Capital One and Discover offer preapproval forms on their websites. It's worth checking to see if a card offers preapproval before you apply for it.
Are there Chase credit cards for bad credit?
Chase doesn't have any cards for consumers with bad credit scores. You need at least a good score to apply for a Chase credit card.