The best credit cards for people with bad credit still offer some cashback and bonus rewards.
It's possible to qualify for credit cards even if you have bad credit or no credit history at all. In fact, responsibly using a credit card is one of the easiest ways to establish credit history and repair your credit score.
You probably won't qualify for credit cards with amazing rewards and perks, and the APR will likely be high. But if you can stay on top of payments and spend within a budget, you can expect to see a jump in your credit score over time.
So what are the best credit cards for bad credit borrowers, and how can you decide which is right for you? To help, we've compiled a list of our six favorites, including both secured and unsecured card options.
The Best Credit Cards for Bad Credit
- Discover it Secured Credit Card: Best Secured Credit Card
- Petal 1 'No Annual Fee' Visa Credit Card: Best Unsecured Credit Card
- Capital One Quicksilver Secured Cash Rewards Credit Card: Best for Rewards
- Capital One Platinum Secured Credit Card: Best for Low Deposit
- Chime Credit Builder Secured Visa Credit Card: Best for No Interest
- Tomo Credit Card: Best for High Credit Limit
Discover it Secured Credit Card
- Hefty welcome bonus
- Cash back rewards
- No annual fee
A secured credit card poses less risk to credit card issuers, which makes it easy for borrowers with no credit history or a poor credit score to qualify for the Discover it Secured Credit Card. While it might be challenging to give up $200 as a refundable security deposit, you can get it back in as few as seven months; that's when Discover will start to review your account to determine if your improved credit score qualifies you for an unsecured credit card instead.
And that $200 refundable security deposit is well worth it, even if it takes longer than seven months to qualify for an unsecured credit line. That's because the Discover it Secured Credit Card earns 2% cash back at gas stations and restaurants on up to $1,000 every quarter. Plus, you'll earn unlimited 1% cash back on all other purchases.
Unlike most other credit cards for bad credit, the Discover card even offers a (sort of) welcome bonus: After your first year, Discover will match your cash back dollar for dollar. It's called the Cashback Match and means you essentially earn 4% and 2% cash back in respective categories during your first year. You'll just have to wait until the end of that first year to collect the matched funds as a statement credit.
Earning rewards feels great, especially since most subprime cards have no rewards program to speak of. But the primary goal for any credit card with bad credit should be to improve your credit history. The Discover it Secured Credit Card makes that easy with no annual fee and no foreign transaction fees to worry about. Because Discover reports on activity to all three credit bureaus, the card is useful for improving credit scores. Just be careful not to carry a balance from month to month: Like most credit cards for bad credit borrowers, the APR is high.
Petal 1 'No Annual Fee' Credit Card
- Potentially high credit limit
- Cash back at select merchants
- No annual fee or security deposit
If you're hoping to get a credit card for bad credit but don't want to fork over the funds for a refundable security deposit, an unsecured card is your best option. We like the Petal 1 'No Annual Fee' Visa Credit Card for several reasons â€" but namely the lack of fees. And it's not just 'no annual fee' appeal; Petal 1 also boasts no foreign transaction fees.
We also like this unsecured card because the credit limit starts at $300 but can go as high as $5,000. Borrowers can qualify for a credit line increase in as few as six months as long as they make on-time payments and see a boost in their credit scores. And with Petal reporting credit card activity to all three credit bureaus, boosted credit scores are totally possible.
You do have to be careful about the APR; it can go as high as 32.49%. You also won't get a welcome bonus like you will with the Discover option above. But you'll still be eligible for 2% to 10% cash back at select merchants.
Capital One Quicksilver Secured Card
- Cash back on every purchase
- No annual fee
- Leading mobile app
Borrowers with poor credit scores shouldn't bother applying for the Capital One Quicksilver Secured Cash Rewards Credit Card; Capital One makes it clear that you'll need fair credit, which is on the higher end of the bad credit spectrum. But if you do qualify and can part with the $200 security deposit, this card is worth your consideration.
You'll earn unlimited 1.5% cash back, which means you'll be earning money while improving your credit score. Capital One also initiates automatic credit line reviews, which could earn you a higher credit limit without an additional deposit â€" as long as you've made on-time payments for six months.
There's no annual fee for the Quicksilver card. In fact, there are no foreign transaction fees, no replacement card fees and no authorized user fees. Overall, Capital One tends to be on the cutting edge of eliminating the 'hidden fees' of the banking world.
As with any secured or unsecured card for bad credit, you've got to be careful with the high APR. Just don't carry a balance from month to month, and you won't have to worry about the Quicksilver's steep interest rate.
Capital One Platinum Secured Card
- Higher credit limit than security deposit
- No annual fee
- Leading mobile app
There are no annual fees or foreign transaction fees to sweat with the Platinum card from Capital One, though you do need to watch out for that 28.49% APR. And while you are required to make a refundable security deposit, you can put down as little as $49 and get approved for a $200 credit line.
Want a higher credit limit? Put down $99 or $200, and Capital One will increase your credit line, up to $1,000. And with automatic credit line reviews, your credit limit could go up on its own in as few as six months without a larger deposit â€" as long as you make on-time payments.
Because Capital One reports card activity to all three major credit bureaus, borrowers can anticipate improvements to credit scores when using the card responsibly.
Chime Credit Builder Secured Card
- No APR or annual fee
- No credit check to apply
- No minimum security deposit required
Chime doesn't run credit checks for approvals, which means borrowers with poor credit scores or no credit history at all can qualify. In fact, Chime designed this card for poor credit borrowers â€" and claims that members see an average increase of 30 points on their credit scores over eight months.
Unlike other secured cards, you don't have to make a minimum security deposit to get started. Instead, you can fund the Credit Builder account via your linked checking account whenever and however you see fit. In that way, you set your own credit limit, and the Credit Builder account works like a prepaid debit card. But because Chime reports activity to the three major credit bureaus, you can improve your credit score for responsible usage.
Don't worry about maxing out the card, either; unlike other credit card issuers, Chime doesn't report credit utilization to the credit bureaus. This makes the Chime Credit Builder card a safe way for beginners to start building (or repairing) credit. Plus, there are no annual fees or foreign transaction fees; there's not even an APR, so there's no danger of racking up high-interest credit card debt.
There are some downsides to the Chime Credit Builder Secured Visa Credit Card, however. Because it's so drastically different from other credit cards, first-time credit card users might not learn the right habits. This could affect them down the road when they've graduated to traditional credit cards. There are also no rewards or bonuses, which you can get from a few of the credit cards for bad credit borrowers on this list.
Tomo Credit Card
- No APR or annual fee
- No credit check to apply
- Up to $10,000 credit limit
You don't need a credit score to apply and get approved for Tomo, but that doesn't mean you'll automatically be approved for the max $10,000 credit limit. Instead, credit lines start as low as $100.
Still, Tomo makes a compelling offer for borrowers with a bad credit score. You can earn 1% cash back on all purchases, there are no annual fees or foreign transaction fees and you don't need to put down a security deposit since it's an unsecured card.
You'll have to link a bank account to your Tomo card. Tomo automatically draws from this account to pay off your card every seven days when you first sign up, so be careful: If you spend freely with the card, you'll have to pay for it out of your bank account soon enough. Because of this auto-pay feature, Tomo doesn't allow you to carry a balance from month to month, which is why there's no APR on the account.
Tomo can be advantageous for poor credit borrowers â€" but the danger of overspending might be too much for someone who's working on improving their spending habits and credit score.
What Credit Score Is Considered Bad Credit?
A bad credit score is 579 or below. Some lenders and online resources may refer to this as 'poor credit' or 'subprime credit,' and others might set the threshold higher â€" a credit score below 600 or even 620 could be considered as bad credit by some lenders. The FICO credit score range goes from 300 to 850, with 850 representing the highest credit score possible. According to Experian, a third of Americans have a poor or fair credit score (300 to 670).
Your credit score is based on five key factors:
- Payment history (35%): Making on-time bill payments â€" rent, utilities and credit cards, for example â€" can make a big impact on your credit score.
- Credit utilization (30%): Having a high amount of credit available to you each month, but choosing not to use it, is another great strategy for boosting your credit score. Conversely, maxing out your credit cards each month is a red flag to lenders and thus reduces your credit score.
- Credit history (15%): The longer you've had credit accounts open (and in good standing), the higher your score tends to be. Because this component is based on length of time, there's nothing you can do to speed up the process. Just make on-time payments every month, and you'll see slow but steady improvements to your credit score.
- Credit mix (10%): Lenders like to see that you can responsibly manage a healthy mix of loans, like credit cards, mortgages, auto loans and student loans. Having a mix of revolving credit and installment credit goes a long way toward improving your credit score.
- New credit (10%): If you open too many new credit accounts all at once, this signals risk to lenders and can lower your score. So while opening a credit card to establish good credit habits is helpful, you should focus on just one credit line at a time; limit applications for new credit cards to one every six months, max.
How can you improve your credit score if you have bad credit? Making on-time rent and utility payments is a good start; just make sure your landlord and utility companies report your activity to the three credit major bureaus. Opening a secured credit card for bad credit borrowers is another good way to establish responsible credit usage; it may take some time, but your credit score will eventually grow.
How to Check Your Credit Score
How can you know if you have bad credit? If you've recently applied for a credit line â€" like a credit card or car loan â€" you should be able to ask to see a copy of your credit report. Once a year, you can also get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion) by calling 877-322-8228 or visiting AnnualCreditReport.com.
You can also create an account with a free credit scoring website like Credit Karma or Credit Sesame. Contrary to popular belief, such sites do not hurt your credit score because they make soft inquiries (also called soft pulls) on your credit report. Hard inquiries (or hard pulls) do affect your credit score, but if they're infrequent, they're usually not a big deal. Hard pulls are necessary when applying for most types of credit, and the hard inquiries fall off your credit report over time.
When Should You Get a Credit Card for Bad Credit?
Credit cards for bad credit typically carry high APRs and offer no rewards, but they're a helpful tool if you're actively trying to repair your credit. If you have a poor or fair credit score and are taking steps to rectify it, consider applying for one of the best credit cards for bad credit featured on our list.
Responsibly using your credit card for bad credit can boost your credit score over time. It may also get you access to free credit monitoring and credit score access.
If you're completely new to credit, you can also apply for a credit card for bad credit. However, you may have other options, like student credit cards or a secured credit card with better rates and features.
Types of Credit Cards for Bad Credit
There are two main types of credit cards for bad credit (also called subprime credit cards): secured credit cards and unsecured credit cards.
Secured Credit Cards for Bad Credit
Secured credit cards are some of the best credit cards for bad credit because they offer a safety net for the credit card issuer, meaning you can likely qualify for (slightly) better terms and rates. To get a secured credit card, you have to make a security deposit that serves as collateral for the credit card loan.
Most credit card issuers require a minimum security deposit of at least $200, but two of the secured cards on our list have lower requirements. Further, the amount of money you pay as a security deposit is typically equal to the credit limit on the card. The Capital One Platinum Secured Credit Card is the one exception on our list of the best credit cards for bad credit.
Because that refundable security deposit eliminates risk to the lender, you'll have an easier time qualifying for a secured credit card than you would an unsecured credit card. Secured credit cards function like debit cards or prepaid gift cards since you're only able to spend money that you have in the account. However, because the money is considered 'collateral' held by the credit card issuer, it's treated like a regular credit card â€" and thus can help you boost your credit score, as long as the credit card issuer is reporting activity to the credit bureaus.
Unsecured Credit Cards for Bad Credit
Because they don't require a security deposit, unsecured credit cards can be more challenging to qualify for as a borrower with bad credit. If you are approved, expect higher interest rates and fees than with secured credit cards. However, if you don't have the money for a security deposit required by secured credit cards, an unsecured credit card may be your only option.
Unsecured credit cards typically have high annual fees, foreign transaction fees, balance transfer fees (and APRs) and late fees. If you're using an unsecured credit card to boost your credit score and climb out of debt, it's important to pay off your card every month, and always on time.
If you don't want a secured credit card but are having trouble getting approved for standard unsecured credit cards because of poor credit, try a store credit card.
How to Build Credit with a Credit Card
Financial experts often say that credit cards are a great way to build credit â€" but they also warn just how predatory credit cards can be. So how can you use a credit card responsibly to boost your credit score without slipping into a pile of credit card debt?
1. Pick the Right Credit Card
First things first, you need to find a credit card that actually meets your needs. Here are some things to consider:
- A secured credit card may pose lower risk for you and keep you from overspending.
- A card without an annual fee is probably the way to go if you're on a tight budget.
- Pay attention to other fees, like late fees and balance transfer fees. These are often higher for borrowers with bad credit.
- While we recommend finding a card with a low APR, even the best credit cards for bad credit have a higher than average APR; it's just how it goes.
- If you're worried about overspending, find a card with a lower credit limit. But if you can resist temptation, get a card with a higher credit limit to make it easier to boost your score.
- Choose a card whose issuer reports activity to three major credit bureaus. Most credit card issuers do, but it's always a good idea to check.
2. Create a Budget
The key to avoiding credit card debt is to pay it off every month. That means you should only swipe your card for purchases that you could pay for out of pocket. While you might have a $1,000 credit limit, for example, you may discover that you should only spend $500 a month based on your budget.
3. Practice Responsible Borrowing
Using the credit card responsibly is key to actually boosting your credit score and avoiding further debt. But what does that look like?
- Pay your card off in full every month. Set a reminder on your phone or in your calendar so you never miss a payment. While making a minimum payment is enough to avoid late fees, paying off the card in full shows creditors that you're responsible â€" and also avoids expensive interest on the remaining balance.
- Don't max out your card. Having a high credit limit can work to your advantage as long as you never actually spend as much as you're approved for. For example, if your credit limit is $1,000, try to spend $300 or less each month. This keeps your credit utilization low, thus improving your credit score.
- Don't open new cards. As your credit score starts to improve, you might start receiving offers for better credit cards. While you may eventually want to upgrade to a better card with a lower APR and better features, don't jump at the first card offer that reaches your mailbox. Instead, strategically compare credit cards to determine the right one for you, and wait at least half a year before applying for a better one.
4. Keep the Card Open
Even if you eventually qualify for better credit cards, it's important to leave your old credit card open. This keeps the average length of your credit account higher and increases your overall credit utilization (as long as you stop using this card). So stick it in a sock drawer or a fire safe â€" just don't close it.
Frequently Asked Questions (FAQs) About Credit Cards for Bad Credit
You may have questions about getting a credit card if you have bad credit. We've found the answers to the most common questions.
You can get a credit card if you have bad credit, but your options will be more limited. Expect card offers to include heavy APRs and have limited perks. You may only qualify for a secured credit card, which requires a security deposit to open. Review our list of the best credit cards for bad credit to choose an option that can put you on the right path toward rebuilding your credit score.
It is possible to do a balance transfer if you have bad credit, but you likely won't qualify for a balance transfer card with an introductory 0% APR. Without that key perk, a balance transfer likely won't help you out. Focus on paying down your most expensive (i.e., highest-interest) debts as fast as you can. As your score begins to improve, you may qualify for a balance transfer credit card that's more worth your while.
When choosing a credit card for bad credit, the No. 1 thing you should do is make sure the credit card issuer will report your activity to the three major credit bureaus. Without that reporting to the credit bureaus, you won't see any improvement to your credit score, no matter how responsibly you use the credit card.
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You should also prioritize a credit card with low fees â€" annual fees, maintenance charges and late fees. You can find a lot of secured credit cards for people with bad credit that don't charge any annual fee; this makes them a safe and affordable way to improve your credit score.
Finally, choose a credit card that offers free credit monitoring and offers a path to upgrading to a better card once your credit score improves.
Contributor Timothy Moore is a writer and editor in Cincinnati who covers banks, loans, insurance, travel and automotive topics for The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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