The Best Credit Cards for Bad Credit

A credit card can cure bad credit from the past but you need to make sure you utilize the card properly in order to repair your credit and not end up with more debt. There are a few simple rules that you can follow while rebuilding your credit that will help you out tremendously.

  • Find out your credit score and know it regularly.
  • Determine whether a credit card or short term loan is what you need.
  • Utilize a credit monitoring service to better understand the changes in your credit score.
  • Don’t use rewards programs as a judge of a credit card.

Before you can attempt to repair your credit though you need to know what is causing you to have a bad credit score. The federal government allows you to pull one free credit report every 12 months. You can use this credit report to analyze what is wrong with your credit score and where you can improve. Once you understand your credit score you may choose to use a credit monitoring service so that you can be updated on your credit score regularly. These credit monitoring services use “soft pings” to test your credit score and these pings do not negatively impact your credit score. In fact, they won’t even show up on your credit report.

 

Two Types Of Bad Credit Credit Cards

There are two types of credit cards for those who have bad credit. Unsecured cards offer you the ability to have a more traditional credit card without having to put money down but they tend to have bad terms when you don’t have good credit. Secured credit cards require a security deposit that guarantee that you will use your credit card responsibly. These cards can have good or bad terms but are typically better if you can afford the deposit.

Capital One Secured Master Card

If you are short on credit but still looking to raise your credit the Capital One Secured Master Card is a good choice for you. This card relies on making a collateral deposit that goes towards guaranteeing responsible use of the card. You don’t even need to offer up any more cash than your original deposit to start seeing results with this card. The best part about it is that it is offered by a major bank, which means that you can connect it with your existing Capital One accounts or even move to an unsecured card once you have started to get your credit under control.

Pros:

  • You only need to make your collateral deposit within 80 days of opening your card.
  • Unlike with many secured credit cards your limit may be raised when you show good spending habits without the need to increase your deposit.
  • Included with this card is the Capital One Credit Tracker tool to help you track your credit and see how responsible you are being with your credit.
  • An annual fee of $0 is almost unheard of in secured credit cards.

Cons:

  • At 24.9% interest this is one of the highest interest credit cards out there.
  • Like many secured credit cards, there isn’t a reward program associated with this card.

Wells Fargo Secured Visa Card

The Wells Fargo Secured Visa Card is another card from one of the major banks in the United States. This card has one major difference though. It allows you to get a much higher credit limit than most secured credit cards, making it the perfect card for those who have money to put down to cover opening a card. With a larger credit limit you have the ability to keep your debt utilization ratio down low, which means you aren’t using a majority of the credit limit you have available to you.

Pros:

  • Possible credit limit of up to $10,000 depending on the collateral you have to put down.
  • Low annual fee of $25.

Cons:

  • No free credit report/score provided by Wells Fargo with the bill.
  • No rewards program.
  • High APR of 18.99% (lower than the Capitol One Secured Master Card Though)

US Bank Secured Card

For those that don’t want to have to worry about having a security deposit held for a long period of time you should look into the US Bank Secured Card. Most secured credit cards or only evaluated after more than 18 months. US Bank evaluates their cards after 12 months to identify whether you can move to an unsecured card or not.

Pros:

  • $5,000 possible credit limit if you have the collateral to put up.
  • Fast evaluation of secured status.
  • With an annual fee of $29, this is yet another low fee credit card.

Cons:

  • No free FICO score access with U.S. Bank.
  • A 0% balance transfer APR for 9 months, then a raise to somewhere between 12.99-23.99% depending on your credit history.

Navy Federal nRewards Secured Card

The Navy Federal nRewards Secured Credit Card is probably the best secured credit card that you can find on the market. The major reason this card does not score higher on the list is that you must have an “in” at the Navy Federal Credit Union or be a U.S. Department of Defense employee. This means that the list of people who can actually get this card is relatively short.

Pros:

  • Potentially low APR between 8.99-18%.
  • No annual fee.
  • Unlike many secured credit cards, the nRewards card earns points.

Cons:

  • Limited membership into the Navy Federal Credit Union.
  • A minimum of $500 of collateral is needed for the card. Higher than most other cards.

Digital Federal Credit Union Visa Platinum Secured

This card makes this list for two reasons, it has a low interest rate and no annual fees. It is also a credit union that is relatively easy to join, especially compared to the Navy Federal Credit Union. All you need to do to join this credit union is to make a donation to a charity, this donation is even one time.

Pros:

  • 0$ annual fee.
  • Low APR of 11.5% variable.
  • Reports to all three credit bureaus.

Cons:

  • Secured card.
  • No rewards program.

Citi Secured MasterCard

The Citi Secured MasterCard is another prime example of a great secured credit card with one major flaw. This card offers the ability to hold your security deposit in CDs instead of interest-free savings so you get a little bit of money back when it comes time to get your security deposit back. However, the card does have a high APR rate.

Pros:

  • Money stored in a CD instead of interest free.
  • Ability to move up to an unsecured card in 18 months.
  • Low annual fee of $29.

Cons:

  • A high APR rate of 18.24%.

USAA Secured Platinum MasterCard

USAA is a financial services group that offers a lot of different credit and spending options. The USAA Secured Platinum MasterCard is a great option or those who want to make money on their deposits. This card too has the money stored in a CD where it will earn interest.

Pros:

  • Low APR of 9.90% to 19.90% depending on your credit score.
  • Secured deposit is stored in a CD.
  • You can increase your CD deposits at any time which you can request as a credit limit boost.

Cons:

  • Annual fee of $35.

USAA Secured Card American Express

People like options and this credit card is very similar to the USAA Secured Platinum MasterCard with the exception that it is signed by American Express instead of MasterCard. It comes with the same great benefits including using a CD to store your secured deposit so you can earn money while rebuilding your credit.

Pros:

  • Similar low APR rate of 9.90-19.90% based off your credit score.
  • Your secured deposit is stored in a CD.
  • Increasing the amount of deposit in your CD has the potential to request a credit limit boost.

Cons:

  • American Express cards aren’t accepted everywhere due to the high transaction fee for sellers.
  • Another annual fee of $35.

Open Sky Secured Visa Card

The Open Sky Secured Visa Card is a low APR card that offers the option to put down less collateral than your approved credit limit. This card has only two fees and just about anyone can get the Open Sky Secured Visa Card. Public Savings doesn’t even require a credit check in order to get this card which is fairly unique. Despite the fact there is no credit check required this card reports to all three credit bureaus.

Pros:

  • Low APR of 9.75%.
  • $200 of collateral can get you up to $3,000 of credit line.
  • Only two fees, only one of which is recurring.

Cons:

  • An annual fee of $50.
  • After the first year if you want to increase or decrease the credit limit there is a $25 charger per action. You can change the credit limit within the first year without any penalties so try to plan ahead to avoid the $25 fee.

Credit One Bank Credit Card with Gas Rewards

The Credit One Bank Credit Card is an unsecured credit card that has the potential to turn around your credit score fairly rapidly. It is often considered one of the best sub-subprime unsecured credit cards for people with bad credit. They are not for people with good credit. There are some problems with it. For example Credit One Bank will try to find as many fees as possible if you don’t stay on top of it.

Pros:

  • You can prequalify for this credit card which uses a soft credit check that doesn’t affect your credit score.
  • Regular, automatic reviews for increases of your credit line.
  • 1% unlimited cash back program for gas.

Cons:

  • High annual fee (between $39 and $99).
  • You have to qualify for the card.

Total VISA Credit Card

The total visa credit card is issued by Mid America Bank & Trust. This card is a good option for someone who wants to open a card quick and doesn’t care about having a rewards program. It is especially targeted at those with bad credit. It has a high annual fee with an even higher fee on the first year.

Pros:

  • Instant or near instant approval.
  • Reports monthly to all credit bureaus.

Cons:

  • High APR of 29.99%.
  • First year annual fee of $75 with a recurring annual fee of $48.
  • Processing fee for opening an account.

Capital One Cash Rewards for Newcomers

Targeting a different type of customer the Capital One Cash Rewards for Newcomers isn’t targeted at those people who are looking to increase their credit score. It is instead targeted for those who are moving to the United States and want to build up a credit score. The thing about this is though that Capital One doesn’t prevent people with bad credit from applying for the card and using it to boost their credit score.

Pros:

  • Rewards program with 2% on travel and 1% on everything else.
  • You don’t have to wait for cash back and can get it at any time as an account credit or a check.
  • No annual fee and no foreign transaction fee.

Cons:

  • High APR of 24.9%.

Remember, before signing up for any credit card, do your research. There are a lot of less than ideal credit cards that exist on the market that will look great at first than catch you with high APRs or annual fees or the like. These cards tend to target people with bad debt because they know that those with bad debt are most interested in getting credit cards.

It is also important to ensure that you are making regular payments on your credit cards. Regular payments by themselves will help you to build up your credit score. Late payments will hurt your credit score.

In some cases you might want to consider getting a short term loan instead of a credit card. Short term loans allow you to lump your whole sum together and potentially get a lower APR. This is especially beneficial for those that have a lot of debt and a high APR.

Having a good credit score is important. It will help you to get car loans or even rent an apartment. Good luck building up your credit score and hopefully one or more of these cards will help you out.