Best Credit Cards for Bad Credit (2020 Picks)

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer.

All of the cards listed in this article rank among the best for rebuilding your credit and we share the rationale and low APRs below to prove it. We've also created a unique card comparison tool that allows you to see which card would earn you the highest rewards. Our helpful guide will also explain the traps and pitfalls you need to avoid in a card intended to assist you in rebuilding your credit.

Best Overall Credit Card for New/Rebuilding Credit

Discover it® Secured
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Our Thoughts

The Discover it® Secured is the best card for applicants with new or are looking to rebuild their credit for two reasons: It allows you to rebuild your credit and simultaneously offers the most lucrative cash back rewards among secured cards. Currently, the card offers users an above average 2% cash back on purchases at restaurants and gas stations, on up to $1,000 each quarter (plus, 1% cash back on all other purchases – automatically). This is an outstanding cash back rate on par with rewards from leading cash back cards for excellent credit (up to the quarterly limit).

We also consider the Discover it® Secured to have more potential than other secured cards to earn higher rewards in the long-term. That's because after your account has been open for eight months and you've shown financial responsibility by making regular payments, Discover will consider upgrading you to an unsecured card. While this is a common feature of several secured cards, Discover's unsecured cash back cards consistently rank as some of the best. The Discover it® Secured requires a minimum refundable deposit of at least $200, but this figure is in line with the requirements set forth by most other secured credit cards.

Best Credit Card for Bad Credit with Low APR

Savings Secured Visa Platinum Card
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Our Thoughts

The Savings Secured Visa Platinum Card is our top choice for applicants with bad credit scores who tend to carry a balance from month to month because it offers the most competitive APR among secured cards at 13.49%. It's quite common for cards for people with limited credit histories to have APRs that exceed 20%, making the Savings Secured Visa Platinum Card an easy choice for people who want to save money on credit card interest. In fact, even cards targeted toward applicants with excellent credit scores will have higher APRs.

The Savings Secured Visa Platinum Card also waives balance transfer fees, which can save you hundreds of dollars when you consider competitors typically charge a fee of 3% to 5% of the amount you're transferring over. For most people, applying for the card will require a low one-time fee of $15 to become a lifetime member of the American Consumer organization, which makes you eligible to apply. That's quite the value proposition when you consider the high number of secured cards plagued with fees.

Best Credit Card for Students With A Limited Credit History

Discover it® Student Cash Back
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Our Thoughts

The Discover it® Student Cash Back is the best pick for students who lack a credit history because it's relatively easy to qualify for and offers an industry-leading rewards rate. The excellent 5% cash back in rotating categories (up to $1,500 each quarter) you'll earn each time you activate with the Discover it® Student Cash Back rivals the cash back rates offered by top cash back cards. While it's true that the 5% cash back rewards are stifled by the quarterly cap, the card also offers a respectable 1% cash back on all other purchases — which is just a notch below the best available cash back rates available for college students. Therefore, it won't take much spending in the card's rotating categories to put you above those other options. For 2020, the categories include grocery stores, Walgreens and CVS (January-March), gas stations, Uber, Lyft and wholesale clubs (April-June), restaurants and PayPal (July-September),, and (October-December).

The Discover it® Student Cash Back is currently matching all the cash back students earn during their first year of card membership, which we consider to be one of the best available benefits for people with limited credit. While the Discover it® Student Cash Back lacks a sign-up bonus, the cash back match offered by the card has the potential to be worth significantly more than the sign-up bonus on other student cards.

Best Credit Card For Bad Credit With A Low Security Deposit

Capital One® Secured Mastercard®
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Our Thoughts

TheCapital One® Secured Mastercard® is our top recommendation for people who don't want to commit a large amount of money to a security deposit to open a secured card. The Capital One® Secured Mastercard® offers oversized credit limits when compared to its required security deposits. For instance, a $49 security deposit could get you a $200 credit line. That's an excellent value when you consider most other secured cards offer cardholders a credit limit that's equal to their security deposit. The card currently offers a refundable minimum security deposit of $49, $99 or $200.

Another excellent added benefit of the card is that Capital One may give you access to a higher credit line after making just five monthly payments. Competing cards typically don't disclose the time frame for their credit line increases, but we consider five months to be on the competitive side. A higher credit line will generally mean a more favorable credit utilization ratio (the amount of debt you carry on the card compared to the credit limit), which leads to a higher credit score. Due to this, this card can be a great aid to helping your repair your credit score.

Best Credit Card For Those With Bad Credit Who Want Miles

AeroMexico Visa Secured Card
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Our Thoughts

The AeroMexico Visa Secured Card is the best card for people with low credit scores who are interested in earning miles. The card earns a respectable 1% rewards rate for eligible purchases, but the card's $99 companion pass is what makes it stand out. The pass allows cardholders to buy an additional ticket on an AeroMexico airline flight for just $99. This is a feature that's not typically available on cards targeted towards people with bad credit. Currently, an AeroMexico round-trip flight from New York City to Cancun is $671, meaning utilizing the companion pass for this flight would yield an outstanding rewards value of over $550.

Anyone considering applying for this card should be aware that it does have a $25 annual fee. However, assuming you use the companion pass just once, you'll more than make up for that cost. Overall, there are no other cards for people with damaged credit that will offer more miles or benefits than the AeroMexico Visa Secured Card.

Summary of the best credit cards for people with bad credit

Top Credit Cards For Bad Credit

Best ForAnnual Fee
Discover it® SecuredBest For Most$0
Savings Secured Visa Platinum CardPeople Who Carry A BalanceNo Annual Fee
Discover it® Student Cash BackStudents$0
Capital One® Secured Mastercard®A Low Deposit Requirement$0
AeroMexico Visa Secured CardAirline Miles$25

Top Credit Cards For Bad Credit

Best For
Discover it® SecuredBest For Most
Savings Secured Visa Platinum CardPeople Who Carry A Balance
Discover it® Student Cash BackStudents
Capital One® Secured Mastercard®A Low Deposit Requirement
AeroMexico Visa Secured CardAirline Miles

Credit Card Comparison Tool

If you have a bad credit score or limited credit history and want tailored card recommendations, take a look at our credit card comparison tool below. Once you click edit you'll be able to input your estimated monthly expenses. Our comparison tool will then list the estimated rewards you'll earn over two years across several different credit cards.

Assumptions based on $1,430 monthly spend
Monthly spending:

Choosing The Best Card When You Have Bad Credit

To start, anyone who has a FICO score above 670 shouldn't be searching for a credit card for people with bad credit. A FICO score of at least 670 qualifies you to get a card in the next tier up. This could lead to higher rewards rates, more miles, or lower interest rates, depending on what exactly you're searching for in a card.

College students who have a limited credit history will have more options available to them than someone who isn't a student and has the same credit or worse. That's because there are several credit cards that are targeted specifically towards establishing relationships with college students after graduation. We recommend students to apply to these types of cards since they offer higher rewards than secured cards and have less stringent requirements than the top cards.

Most people with bad credit will only qualify for a secured card. A secured credit card will generally grant you a credit line that's equivalent to the security deposit you put down. For instance, assuming you put down a $250 deposit, you'd likely be granted a $250 credit limit.

But what's the point of a credit card where you have to provide your own credit line? Well, secured cards offer a method through which you can improve your credit score. Once you make enough on time payments, you should be able to move up to a unsecured card. The security deposit you put down is typically returned to you, given you made on time payments and are in good standing with the credit card issuer.

People with bad credit who tend to carry a balance on their credit card should get a card that offers a low APR. That's because carrying a balance on your credit card can get very expensive due to high interest rates. Secured cards often come equipped with high APRs, but there aren't many options for applicants with bad credit. Generally, the best solution is to opt for a secured card from a credit union, as they tend to have lower APRs. Of course, to avoid interest charges at all, you should only charge what you can pay off when the bill arrives and don’t revolve a balance on the card.

For most people with bad credit, the best option will be a secured card that offers a rewards rate of at least 1%. The card should come without an annual fee and the credit line you're offered should at minimum be equal to the amount of your security deposit. Any card that does have an annual fee should at least offer great rewards to make up for it.

The card should also be clear on what your path to an unsecured line of credit will be. In other words, it should state that it reports to major credit bureaus. Without any reporting, your score will not increase.

Some card companies offer credit cards for people with bad credit that don't require a security deposit. We recommend you avoid these offers, as we've examined dozens of these cards and found that they always come with numerous fees that in the long-run will cost you more than a security deposit. While secured cards return your security deposit once you move on to an unsecured line or close an account in good standing, you more than likely won't be reimbursed for the costly fees.

How We Arrived At Our Recommendations For People With Bad Credit

Our team crunched the numbers on dozens of credit cards that are geared towards people with bad credit. Our analysis helped us arrive at the conclusion that there are several great cards available. The 'best' card will be the one that aligns best with the user's needs. Therefore, we selected five different cards as the best for people with bad credit based on distinct needs and uses. The cards we chose had the highest rewards, great long term value, low security deposits and valuable benefits.

We also took into consideration specific features that are extremely important for someone who is rebuilding their credit. For instance, how long does it take for a cardholder to be considered for an unsecured line of credit? Therefore, while our quantitative analysis was rigorous, there are many factors at play. Lastly, each decision was made by a group of our in-house credit card experts with years of experience.

We concluded that the Discover it® Secured is the best credit card for people with bad credit because it lets you earn rare high rewards while you rebuild your credit. People with different needs, like anyone interested in getting the best APR for carrying a balance or the lowest security deposit requirement, should consider another one of our picks. None of our selections charge an annual fee, which means they won't add another financial stress.

Factors We Considered

Security Deposit: Most cards for people with bad credit require a minimum security deposit of $200 to $500. Therefore, cards with security deposits less than the lower bound were viewed in a positive light. On the other hand, cards with higher security deposit requirements earned lower marks under our scoring system if they didn't earn cardholders a higher credit line to go along with it.

Credit building. We only considered credit cards that could help cardholders rebuild their credit standing. That means we would only recommend cards that report account activity to one of the major credit bureaus—Experian, Equifax or TransUnion.

Rewards Rate: We wanted to recommend cards that helped consumers improve their credit scores while giving them the ability to earn rewards. We determined that even people with bad credit should expect to earn at least a 1% rewards rate. Therefore, we gave preference to cards that met or exceeded this threshold.

Long Term Value: Our selections favored long term utility over short term rewards. Short term rewards in the form of bonuses are great to have, but people with bad credit need ongoing value. We also took into account which cards allowed users to move on to better cards once the credit rebuilding process is complete.

Sign-Up Bonus: Sign-up bonuses for people with bad credit tend to be much less lucrative than those offered to applicants with better credit scores. Despite this, we deem bonuses to be a nice piece of a card's value proposition. So, while bonuses were considered, they were not typically used as a primary scoring factor.

Fees: All of our top recommended cards either have no annual fees or offer enough rewards to offset its fees. We also considered other types of fees, like foreign transaction fees and balance transfer fees. These types of fees were more critical in certain categories than others. For instance, someone searching for a low APR would likely benefit from the absence of a balance transfer fee.

Other Perks: We carefully read through each card's terms and conditions in order to see if there were any additional perks or benefits that we should be aware of. These were then evaluated accordingly. For instance, some cards offer access to a suite of tools that allow you to track your spending, which can be helpful while rebuilding your credit.

Other Secured Cards To Consider

We did come across some cards worth discussing that missed making it onto our final list of the best credit cards for people with bad credit. The cards below were carefully considered, but ultimately fell short.

Wells Fargo Secured Visa® Credit Card: The Wells Fargo Secured Visa® Credit Card can be a decent pick if you're just interested in improving your credit score and that's it. While other cards offer rewards or low interest rates, the Wells Fargo Secured Visa® Credit Card offers neither. Ultimately, most people would be better off with a card like the Discover it® Secured over the Wells Fargo Secured Visa® Credit Card because at least you'll be earning rewards while repairing your credit score.

Joe Resendiz

Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.

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How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).