Best Credit Cards For Bad Credit 2022

What are the best credit cards for bad credit? I am sure this is a question you probably asked yourself in case of bad credit, and we will give you an answer below.

Bad credit won't prevent you from obtaining a credit card, but it won't be one of those cards that come with valuable rewards or privileged benefits. It will be a more basic card in its place, and  It is alright because the idea is for you to utilize this credit card to build or repair your credit before moving on to a better product.

Secured credit cards, in our opinion, are ideal for people with bad credit. With these cards, you deposit a security amount to safeguard the issuer from nonpayment. (You can get your money back when you close the account or upgrade it.) Secured cards are some of the simplest to get because the deposit lowers the risk. However, approval isn't guaranteed because you still have to demonstrate your source of income and you risk being turned down if your credit record has any serious problems like bankruptcies.

There are also unsecured cards for individuals with bad credit, which don't require a deposit but can have hefty fees that, over time, add up to more than the standard deposit on a secured card. (In recent years, a few new credit card companies have begun to provide credit cards with no credit check and low or no fees, albeit these products might have their own downsides.) 

Although they often have low credit limits and high-interest rates, store credit cards can also be easier to obtain. However, act with caution. The best credit cards for those with bad credit are listed below, hopefully, you will be able to find one that fits your needs.

Summary:

• Best for No credit check and easy account management: Chime Credit Builder Visa® Credit Card

• Best for Rewards and upgrading: Discover it® Secured Credit Card

• Best for No credit check: OpenSky® Secured Visa® Credit Card

• Best for Low deposit: Capital One Platinum Secured Credit Card

• Best for Rewards and upgrading: Capital One Quicksilver Secured Cash Rewards Credit Card

Best Credit Cards for Bad Credit

Always verify information on the issuer's website before applying.

1. Best Credit Cards For Bad Credit: Discover it® Secured Credit Card

Our pick for: Rewards and upgrading

The Discover it® Secured Credit Card requires a cash security deposit, just like other secured credit cards for those who are building or rebuilding their credit. It offers rewards, unlike the majority of others. But its upgrade options are what really set it apart from the competition. A method is in place at the issuer to automatically examine accounts for potential transition to unsecured cards.

2. Best Credit Cards For Bad Credit: Capital One Quicksilver Secured Cash Rewards Credit Card

Our pick for: Rewards and upgrading

For people with bad credit, the Capital One Quicksilver Secured Cash Rewards Credit Card offers an astonishing array of features. You must make a deposit, but in return, you receive a Capital One card with no annual fee that reports to all three credit bureaus, automatic credit limit reviews after six months, and perhaps even a path to an unsecured Capital One card. You also get 1.5% back on all other purchases in addition to 5% back on hotels and rental cars booked through Capital One Travel, which is comparable to the rewards offered by many unsecured credit cards.

3. Best Credit Cards For Bad Credit: OpenSky® Secured Visa® Credit Card

Our pick for: No credit check or no bank account

Although there is an annual fee associated with the OpenSky® Secured Visa® Credit Card, many people will still want to look into it for two reasons. First off, no credit check is necessary. Secondly, you can finance the deposit or pay your bill with a money order or a Western Union payment without having a traditional bank account.

4. Best Credit Cards For Bad Credit: Chime Credit Builder Visa® Credit Card

Our pick for: No credit check and easy account management

With this card, you may automate your payments so you never miss a payment and there is no minimum deposit requirement, yearly fee, or interest charge. But in order to receive it, you must be a Chime banking customer, which involves another step and has unique customer service requirements.

5. Best Credit Cards For Bad Credit: Tomo Credit Card

Our pick for: No credit check, annual fee, security deposit or APR

Due to the fact that the Tomo Credit Card's issuer may consider a number of other factors, such as income and account balances, in place of a credit check or security deposit, you may be eligible for one even if your FICO score is low (or nonexistent). Due to the fact that you cannot carry a balance over from one month to the next, the card offers 1% cash back and has no interest or fees.

6. Best Credit Cards For Bad Credit: Grow Credit Mastercard

Our pick for: No credit check, annual fee, security deposit or APR

A security deposit or credit check is not necessary for the Grow Credit Mastercard. By paying for qualifying subscriptions like Netflix or Spotify, you may build your credit history without paying any interest or other costs. Because you cannot use the card to carry debt, there is no APR.

7. Best Credit Cards For Bad Credit: Credit Builder Secured Visa® Credit Card

Our pick for: Adjustable credit limit

Armed Forces Bank's Credit Builder Secured Visa® Credit Card makes it simple to gradually boost your credit limit over time, giving you more freedom and lowering your credit use. By simply depositing extra money at any time, you can raise your limit in $50 increments.

8. Best Credit Cards For Bad Credit: DCU Visa® Platinum Secured Credit Card

Our pick for: Low fees and interest

The DCU Visa® Platinum Secured Credit Card offers a lower interest rate than many unsecured cards for people with good credit despite being a secured card for people with bad credit. To obtain this card, you must be a member of Digital Federal Credit Union, though you can do so for as low as $10 by joining a partner organization.

9. OTHER RESOURCES

How to tell if you need a credit card for bad credit

Regular credit card applications are essentially requests for the card issuer to lend you money without any assurance that you would repay it (apart from your pledge to do so). There is no security supporting the transaction, unlike with a mortgage or auto loan. The issuer denies the application because it believes the risk is too great if the applicant has a low credit score.

However, features on credit cards for bad credit help card issuers approve more applicants by lowering their risk. When applying for credit cards with bad credit, the process is more "forgiving" than when applying for standard credit cards. You might be an excellent candidate for credit cards with bad credit if:

Your credit score is below 630.

On a scale from 300 to 850, a credit score below 630 is typically regarded as having substandard or bad credit. You may obtain your credit score for free with NerdWallet if you are unsure of it. Check your credit score for free here. One of the best ways to boost your credit if you have a low score is a credit card made just for persons in your situation.

Your credit history is nonexistent or extremely limited.

Typically, the term "bad credit" refers to mistakes like missing payments or having accounts turned over to collection agencies. However, as they are often viewed as risky consumers, those with a spotty credit history or none at all can also profit from a credit card for bad credit.

What causes bad credit?

Credit scores are determined by many variables. Some are rather insignificant; for instance, applying for a new credit card can temporarily lower someone's score by a few points because it implies a desire for more financial resources. Some are more grave. Missed payments, charge-offs, and bankruptcy can all seriously harm credit scores.

Here are the main factors in your credit score and how they can add up to bad credit:

• Payment history: This is the single biggest element affecting your score. Do you make prompt payments on your bills? It's possible that paying a payment a few days late won't have any impact on your credit score (although you might get hit with a late fee). But after a debt is overdue by 30 days, anticipate that it will appear on your credit report and have an impact on your score. Your credit score might suffer significantly from even a single late payment. With time, the harm lessens, but if you consistently skip payments, it worsens significantly.

• Amounts you owe: While your total debt load is important, scoring algorithms pay close attention to your credit utilization, or how much of your credit limit you are actually utilizing. The likelihood that someone is in a poor financial situation increases as they go closer to "maxing out" a line of credit. A $190 balance against a $200 credit line shows someone living beyond their means, but a $190 balance against a card with a $2,000 limit won't raise many concerns.

•  Length of credit history: Low scores may be a result of having a little credit history. People frequently make the error of canceling out-of-date accounts, which lowers this component of their score. Even if the card is merely tucked away in a drawer, a credit card account that is ten years old is nevertheless important in terms of credit score. Keep it open and use it once a year if there is no yearly charge to prevent the issuer from closing it for inactivity.

• Types of credit: Credit cards, loans, and other sorts of accounts are preferred by scoring models. You must start somewhere, of course, but it's preferable not to let one account represent your complete credit history.

• New credit applications: Expect every application to momentarily lower your score by a few points. The effect is increased, though, if you apply for several cards at once, as that may indicate that you are in need of money badly. Because of this, it's crucial to "call your shots" and only apply for cards that have a high likelihood of being approved.

What's the easiest credit card to get approved for?

No credit card approval is ever guaranteed. Issuers consider your income and other factors in addition to your credit history. Even yet, some cards have requirements that are easier to achieve than others.

• The easier it is to get authorized, the lower the risk is to the credit card issuer. That is why persons trying to establish or repair their credit are advised to start with secured credit cards. With these cards, you must pay a cash security deposit that the issuer will use as insurance in the event that you fail to make your payments (and which you get back when you close or upgrade your account). Because the deposit lowers the risk, issuers can offer these cards to more people. All of the cards shown on this page are secured.

• Additionally, it is typically simpler to qualify for store credit cards than bank cards. They frequently have low credit limits and high-interest rates, but if you keep your balances close to the limit and pay them off each month, you can use them to establish credit.

• A card that doesn't need a security deposit is unsecured. Each and every "normal" credit card is unsecured. However, unsecured credit cards that are marketed to people with poor credit are infamous for their exorbitant fees and unclear rules. Additionally, the companies that offer these cards typically don't have better cards to switch to, so you are forced to decide between keeping a high-fee card active (which costs you money) or canceling it (which could hurt your credit score). The majority of the alternatives in the section below under "Credit Cards to Avoid" are unsecured.

• Look into credit cards for fair credit if you've started to establish credit and have a score in the mid-600s. These offer greater advantages but don't need a perfect credit rating.

The costs of bad credit

Credit scores are made to indicate how risky it is to lend money to a certain person. The higher the score, the lesser the perceived risk. Bad credit restricts your ability to borrow money: If you can receive a loan at all, the interest rate will be higher.

There are other expenses. Credit scores are now interpreted as a broad indicator of dependability even though they weren't intended to be that way. They are used by businesses including utilities, employers, landlords, insurers, cell phone providers, and others to assess clients or candidates.

According to a NerdWallet survey, many people are ignorant of these implications. A sizable portion of Americans was unaware that having bad credit could make it difficult for them to rent an apartment (23%), increase the cost of their auto insurance (43%), restrict their options for cell phone service (49%) or necessitate the payment of security deposits for utility services (52%). Additionally, 1 in 5 respondents believed that a low credit score of 600 was sufficient to be approved for any type of credit card.

A card made especially for someone with weak credit or no credit is typically the quickest and simplest way to establish credit.

Choosing a credit card for bad credit

Low credit limits and high-interest rates are typical features of credit cards for those with terrible credit. For the time being, that's alright because the main goal of these cards is to assist you in establishing or repairing credit. Choose a card by paying attention to:

Reporting to credit bureaus: Only if a card reports your payments to the organizations that put together the credit reports that form the basis of credit ratings will it assist you in establishing credit. Choose a card that sends information to all three main credit reporting agencies. Due to the fact that they do not involve borrowing money, prepaid cards do not report to the credit bureaus.

Low fees: Bad credit unsecured credit cards sometimes promise that you may apply for them with no collateral. Then, however, you are charged yearly fees, maintenance fees, and other credit card costs that can easily cost more than $100 annually. The annual fee on a good secured credit card is either waived or relatively low, and there are no additional fees. There is a deposit required, however, you can get your money back.

Free credit score: To keep track of your development, find an issuer that offers free access to your score. Ideally, the issuer would also provide additional tools like free financial education programs and debt-payment calculators.

A path to upgrade: It's convenient to be able to switch your account to a card with better terms if your credit improves. Will the issuer convert your secured card to an ordinary unsecured card if you already have one? Can you upgrade to a version with no fees or one that offers rewards if you have an unsecured card for people with terrible credit?

10. How to apply for a credit card for bad credit

1. Know your credit score

One of the biggest mistakes people make with credit card applications is choosing cards they don't qualify for. Applying for a card that requires good credit when you have a score of 580 is a guaranteed rejection. That wouldn't be so bad except that each application goes on your credit report and can hurt your score. Multiple applications can just compound the damage. Before you apply, know where you stand.

2. Find a card that suits your score

Cards on this page have a "recommended credit score" graph that shows what kind of credit you'll need to qualify. If you're not logged in but know your score, check how it compares to the recommended range.

3. Apply

Clicking the "apply now" button for a card takes you to the application. You'll usually have to provide your name, address, phone number, and email address. Your Social Security number is necessary to check your credit and for government financial reporting rules. The application will usually ask about your income as well.

4. Fund your security deposit

With a secured credit card, the issuer won't open your account until you're provided your security deposit. Most cards have a minimum in the range of $200 to $300. Your deposit typically determines your credit limit, so if you deposit $500, you'll have a credit limit of $500; deposit $1,000, and you'll get a credit line equal to that amount. Issuers let you fund the deposit with a direct transfer from a checking account; some allow you to pay by money order if you don't have a bank account.

5. Receive your card

Once you fund your deposit, you'll get your card. Start using it to build a positive credit history by following the guidelines below.

11. How to raise your credit score using a credit card

A low credit score isn’t a life sentence. It’s a starting point. Using a credit card responsibly is one of the fastest ways to build credit. Follow these tips:

Use the card. Building a good credit history starts with making on-time payments. So use your credit card regularly and pay your bill before your due date.

Don’t overuse the card. A key element in your credit score is your credit utilization, or how much of your available credit you’re using. A maxed-out card is a sign of someone in financial trouble. So keep utilization below 30% at all times. On a card with a $300 credit limit, for example, that means you should keep your balance under $90.

Pay on time and in full. With any credit card, the best move is to pay your entire balance in full every month. That way, you’ll never pay interest — and the interest rates on credit cards for bad credit are typically very high. If you can’t pay in full, pay at least the minimum amount due by your due date.

Track your progress. Check your credit score and credit report regularly to see whether you’re moving in the right direction or if other things are holding you back.

Keep accounts open, if possible. The age of your open credit accounts is a factor in your credit score. So don’t close accounts unless there’s a compelling reason, such as an annual fee on a card you don’t plan to use. When it comes time to upgrade from a secured card to an unsecured one, see if your issuer will let you keep your same account.

12. Credit Cards to avoid

Many credit cards that are marketed to people with bad credit are expensive. These cards might not require a security deposit, but they impose an array of steep fees just for the privilege of carrying and using them. These can include application fees, processing fees, activation fees, and monthly “maintenance” or “membership” fees, in addition to annual fees.

Add up those fees, and they can easily cost you more over the first couple of years than the deposit on a good secured credit card — and, unlike a security deposit, the fees you pay are money you’ll never get back. These cards can even cost more to carry than some of the best rewards credit cards on the market. Their ongoing interest rates tend to be high as well.

We recommend you steer clear of products like these:

1. FIRST PREMIER BANK CREDIT CARD

The fees on the First Premier Bank Credit Card are truly eye-popping. For starters, there’s a "program fee" that applies before you even get your card. Then there are ongoing fees that depend on your credit limit.

This convoluted fee structure owes its existence to a provision of federal law. Under the Credit Card Act of 2009, the fees on a credit card in the first year the account is open can’t exceed 25% of the credit limit. Processing fees are charged before you open the account, so they don’t count against the 25% cap. 

After the first year, there are no limits, so that’s when monthly maintenance fees kick in. As a result, you’ll pay between $120 and nearly $175 a year in fees for this card. On top of it all, the APR on this card was 36% as of June 2019 — one of the highest interest rates on any card.

2. HORIZON GOLD CARD

The banner across the top of this card’s website reads: “Bad Credit, No Credit? Low Score? NO PROBLEM.” In reality, though, there are multiple problems. The Horizon Gold card advertises an unsecured $500 credit limit, but you might have to read the website carefully to recognize that it’s simply a store card that you can use at just one place: the Horizon Outlet online mall. 

The “membership” fees required to use this card come out to nearly $300 a year, and there’s even a one-time $5 “issuance and account validation fee” just to get the card. This card’s issuer, Horizon Card Services, offers several other cards, all of which can be used only at the Horizon Outlet. They include the NetFirst Platinum card, the Freedom Gold, the Merit Platinum, and the Group One Platinum.

3. CREDIT ONE CREDIT CARDS

Credit One Bank — not to be confused with Capital One — specializes in credit cards for those with less-than-great credit. Its offerings include the Cash Rewards Visa Card and the Platinum Visa for Rebuilding Credit, as well as the Official NASCAR Visa. The Credit One website is maddeningly vague about what kind of card you’ll end up with if you apply. 

For example, your annual fee could be anywhere from $0 to $75 in the first year and $0 to $99 after that. You may or not get a grace period. You might get rewards on all purchases, only some, or none. There are also complicated, confusing rules on when your payments will post and when your available credit line is refreshed after making a payment. Our recommendation: Don’t bother trying to figure it out, and don’t bother applying.

4. SURGE CARD/MATRIX CARD

As of June 2019, these cards were charging a $125 annual fee in the first year for a minimum credit line of $500 — 25% of the credit limit, the legal maximum. In the second year, the annual fee drops to $96 — but you start paying $10 a month in maintenance fees, for a total fee of $216 a year. 

The APR, meanwhile, was a whopping 29.99% as of June 2019. The Surge Card and Matrix Card are offered by Continental Finance. That company has several other cards with similarly jaunty names and the same janky terms: the Cerulean Card, the Reflex Card, the Fit Card, and the Verve Card.

5. TOTAL VISA

Like the First Premier Bank Credit Card, the Total Visa starts laying on fees before you even open your account. If you apply and are approved, you must first pay an $89 processing fee to get your card. The annual fee in the first year is $75. In the second year and beyond, the annual fee drops to $48 — but you start paying a monthly processing fee of $6.25, which comes out to $75 a year. Put them together, and the Total Visa card will cost you $164 in the first year and $123 every year thereafter. To top it off, this card’s APR as of June 2019 was an eye-popping 34.99%. Not acceptable.

LAST RESORT OPTIONS

6. INDIGO PLATINUM MASTERCARD

According to the website for this card, the annual fee depends on a cardholder’s creditworthiness. It might be $0, it might be $59, or it might be $75 the first year and $99 every year thereafter. Which one will you pay for? You have to apply to find out for sure. It’s safe to say, though, that people with bad credit are more likely to end up with a $75/$99 fee than a $0 fee. 

Even $59 is significantly more than you would pay in annual fees on a good secured card. The APR on the Indigo Platinum as of June 2019 was 24.90%. That’s high but within the typical range for a credit card for bad credit. You can do worse than this card — but you can also do much better.

7. MILESTONE GOLD MASTERCARD

The Milestone Gold is offered by Genesis Bankcard Services, the same company that’s behind Indigo Platinum. It, too, has fees that depend on creditworthiness: $35 a year, $59 a year, or $75 in the first year and $99 in subsequent years. Adding a layer of confusion, the first year’s fee might be divided between an “account opening fee,” which you pay before the account goes live, and an “annual fee,” which you pay afterward. 

This may be a way to avoid running afoul of the 25% rule. The APR is the same as on the Indigo Platinum, and our general assessment is the same: not the worst card, but far from the best.

Frequently asked questions

What does “bad credit” mean in terms of credit cards?

Bad credit is generally defined as a credit score below 630 on a scale of 300 to 850. Credit scores measure how safe or risky it is to lend to someone. The higher the risk, the lower the score. If you’ve made mistakes with credit — missing multiple payments, maxing out accounts, having bills turned over to collection agencies, your score can drop into the bad-credit range. 

Also, if you’re new to credit, you might not have a credit score at all, which in many ways is functionally equivalent to bad credit — you’re considered a higher risk because you haven’t yet demonstrated your ability to handle borrowed money.

Can I get a credit card if I have bad credit?

Multiple credit card issuers have cards specifically designed for people with bad credit. (They’re often advertised as ideal for “rebuilding” credit.) These are generally “starter cards” — they don’t offer rewards or perks, they charge high-interest rates, and some of them come with steep fees. We generally recommend secured credit cards to people with bad credit. Secured cards require you to put down a cash deposit that the card issuer holds as collateral in case you don’t pay your bill. You get that money back when you close your account in good standing or upgrade to a regular card.

Is a secured credit card my only option if I have bad credit?

A secured card isn't your only option for bad credit — but it's usually your best option. Some card issuers offer regular “unsecured” cards for people with bad credit. These don’t require a cash deposit, but they tend to come loaded with high fees. That’s money you can’t get back, unlike the deposit on a secured card.

What should I look for in a credit card for bad credit?

When looking for a credit card for bad credit, be realistic. You’re not going to find one with rich rewards or lavish perks. You’ll most likely have a high-interest rate (although if you pay your bill in full every month, you won’t be charged interest). And your credit limit will likely be small; secured cards usually give you a credit line equal to your deposit. Beyond that, look at:

• Fees. Look for annual fees of less than $50, and avoid cards that charge maintenance fees, application fees, or processing fees. Several good secured cards don’t charge an annual fee at all.

• Reporting to credit bureaus. Presumably, you want to use your card to build credit so you can qualify for better cards or loans down the road. But using your card can improve your credit only if your payments are reported to the credit bureaus, the companies that compile the credit reports that form the basis of credit scores. Look for a card that says it reports to all three major credit bureaus (Equifax, Experian, and TransUnion).

• Upgrade options. Ideally, after you’ve improved your credit, you could upgrade your account to a better card. That allows you to keep the account open — which is good for your credit score — while getting your deposit back. Many issuers of cards for bad credit have outstanding upgrade options. Others focus only on people with lower scores and might not have much to offer. The lack of an upgrade option shouldn't be a dealbreaker, but a clear upgrade path is a point in favor of some cards.

What do I need to apply for a credit card for bad credit?

You generally need to be at least 18 years old and have a Social Security number to be considered for a credit card. You’ll need to show that you have income, and in most cases (but not all), you must have a bank account. While “bad credit” by itself is obviously not a disqualifier when it comes to cards for bad credit, some issuers might still deny your application if your credit report shows serious problems such as bankruptcy, a civil judgment, or liens against you.