In this review, we will take a look at the 10 best credit cards for people with poor to fair credit.
Everyone knows how hard it can be to build a strong financial profile with damaged credit. Sometimes the problem is past negative items or late payments on your credit report. If you are a young person just beginning your financial journey, no credit at all can be as problematic as poor credit. A good credit score will make life easier and can cause less financial hardship over time. Higher credit ratings mean better rates on things like mortgage payments, car loans, and insurance.
Credit cards for people with a low credit score can serve as a stepping stone to rebuilding and repairing imperfect credit. They can also pave the way to a better financial future. For our top choices, read on to find the card that’s right for you.
1. Discover it Secured Card
A secured credit card is an ideal way to build or rebuild a responsible credit profile. With a secured card, you typically make an initial deposit that is slightly less than or equal to your line of credit. Essentially, to begin with, you are borrowing and paying back your own money each time you use the card and make payments. However, if you make your payments on time and in full, it is likely your credit limit will increase.
The Discover it Secured card is our top choice because it offers up to two percent cash back on all purchases and no annual fee. What makes this card shine is that your cash back reward is matched by Discover in your first year. If you earn $100 in rewards, Discover will deposit an additional $100 in your account on the anniversary of your account opening date. You’ll need to make a $200 minimum deposit to open the account, which will be refunded if you are not approved. With responsible use, your credit line will increase over time.
2. Capital One Secured Mastercard
The Capital One Secured Mastercard also requires you to put some of your own cash down, but in some cases, this amount can be as low as $49 for a credit limit of $200. Keep in mind; you are not paying to get this particular credit card. Your deposit is fully refundable with responsible use and timely payments. As one of the only secured cards where your spending limit can exceed your deposit, it is an excellent opportunity to prove you can use credit responsibly. There are no annual fees, and Capital One reports to all three major credit bureaus. You should start seeing your score increase monthly as long as you make your payments on time. Paying the card in full each month will improve those scores even more.
3. OpenSky Secured Visa Card
If your credit is severely tanked, you will be happy to know that you can still qualify for the OpenSky Secured Visa. There is no credit check required to be approved. However, you will need to lay down at least a $200 security deposit and a $35 annual fee. The amount you deposit is equal to your credit limit. If it seems like you are paying for the privilege of borrowing your own money, you would be correct. However, bear in mind that if your goal is to build or repair your credit score, this is the ideal way to do it. Your payments will be reported to all three credit bureaus each month so you can watch your score increase. This will open up even more opportunities for borrowing responsibly. There is also a Facebook community of OpenSky members to share tips and tricks for rebuilding credit, as well as lots of helpful financial education.
4. Credit One Bank Platinum Visa
Credit One Bank Platinum Visa is up next and is the first card on the list that does not require an up-front deposit. If you are in a tight spot and have a financial emergency, this card may help. For an initial $75 annual fee, you can typically get a $300 credit line. In this instance, your fee is non-refundable and will be charged to your bill immediately, reducing your available credit to $225. As unsecured cards for bad credit go, the Credit One Bank Platinum Visa is reasonable, given the risk the lender is taking. They report to all three credit bureaus, offer a one percent cash back bonus, and you may be eligible for credit limit increases if you pay your bill on time every month. Interest rates are well above 20 percent if you carry a balance on this card, so it is best to pay it off in full each month.
5. Harley Davidson Secured Credit Card
You don’t have to be a biker to take advantage of the Harley Davidson Secured Credit Card. With no annual fee, this is another attractive option when it comes to rebuilding your credit. As with most credit cards for those with poor credit, this card also requires an outlay of cash from your own pocket— a minimum deposit of $300. Your deposit is used to open an FDIC insured savings account that actually earns interest and acts as collateral for your card. Additionally, you will receive one Harley Davidson Reward Point for each dollar spent on eligible purchases (2,500 points is equal to a $25 HD gift card). Make all of your payments on time each month and after a year you may be able to move to an unsecured credit card.
6. DCU Visa Platinum Secured Credit Card
As secured credit cards go, the DCU Visa Platinum Secured Credit Card offers one of the lowest APR’s available at just 13.75 percent variable. However, there are a few hoops you need to jump through if you hope to obtain this card. You need to be a member of the Digital Credit Union, and while there are several paths to membership, not everyone will be eligible. Still, if you can join, this is the secured card to have to help rebuild your credit. You will need to put down a refundable security deposit, but there are no annual or hidden fees. The card does not offer any rewards or points, but DCU does report to all three credit bureaus. You can also pay your security deposit in monthly installments.
7. Credit Builder Secured Visa Credit Card
While this card caters primarily to active or retired members of the armed forces, civilians are still welcome to apply. You can set your own credit limit by depositing $300-$3,000. The funds will be held in an FDIC secured interest-bearing account and are fully refundable if you close your credit card. You don’t need to do this all at once either. You can make ongoing deposits as low as $50 to increase your limit. As with other secured cards, you are paying to borrow your own money, and there is a $35 annual fee. If you use the card responsibly, it is an excellent opportunity to improve poor credit. You will want to enroll in paperless statements, or you will end up paying an additional $12 per year.
8. Green Dot Primor Visa Gold Secured Credit Card
If you expect to be carrying a balance on your card from time to time, the Green Dot Primor Visa Gold Secured Credit Card may be an ideal choice. It comes with some of the lowest interest rates on the market. You will need to make an initial deposit of $200 to activate the card, but it can be paid in installments. There is also an annual fee of $49. However, the 9.99 percent fixed APR makes this an attractive option for those who want to rebuild their credit.
Additionally, you can deposit up to $5,000 to borrow against, which could significantly improve your credit utilization score, something that lenders look at closely. There are some hidden fees here, so watch out. Replacement cards cost $49, and if you are issued a credit increase without a deposit you will be slapped with a $49 charge.
9. BankAmericard Secured Credit Card
The first primary benefit of obtaining the BankAmericard secured credit card is that there is no annual fee. The second main advantage is that unlike many unsecured cards, your APR won’t increase if you end up paying your bill late. You’re also covered against fraudulent charges, and there is no fee to replace a lost or stolen card. Their award-winning mobile app and online platform make this card a winner for those who prefer to do their banking digitally. They also offer 24/7 customer service. You will have continual access to your FICO score, so you can see the health of your credit at any time, which is a plus for those who need visuals for motivation.
10. Deserve Edu Mastercard
The Deserve Edu Mastercard is perfect for you if you are a student who is just beginning to build your financial profile. As you are probably already aware, it can be just as challenging to get along in the world with no credit history as it is with a poor credit rating. This card is designed to pave your way into the wide world of credit. Instead of looking at your credit history, Deserve makes its decision based on your education and factors like future earnings potential. There is no need to provide a social security number, which makes the Deserve Edu Mastercard an ideal choice for international students as well. You will earn one percent cash back on most purchases and get a free Amazon Prime student account for your first year.
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By BCR Staff