When you have trouble paying the bills each month, it’s easy to fall behind. But missing just a few payments can cause your credit score to go down, a massive problem millions of people face each year.
According to Experian, one of the three credit reporting bureaus, over 37 percent of Americans have credit scores below 669. That means that over a third of the population has low credit scores, making it difficult to get approved for lines of credit.
If you’re part of that group, you know how inconvenient not having a credit card can be. Luckily, there are a number of credit cards specifically designed for those with poor credit.
Secured Credit Cards
Secured credit cards work differently than traditional cards. Essentially, you’re borrowing against yourself. Instead of having a credit line you can use, you need to put up money as collateral. The money you deposit is how much you can charge on the card.
For example, if you had a secured credit card and deposited $500 on the card, you could make up to $500 worth of purchases. Once you hit that $500 threshold, you couldn’t use that card anymore until you make a payment.
Secured credit cards tend to be a smart first card for those with bad credit. By using one responsibly, you can start to establish good credit and later qualify for a regular card.
Below are two of the top secured credit cards available.
1. Capital One® Secured Mastercard®
The Capital One® Secured Mastercard® has no annual fee, but it does have a 26.99% (Variable) APR and requires a security deposit. Over time, the card can be a useful credit building tool that can help establish a strong credit report.
2. First PREMIER® Bank Secured Credit Card
You can have extra buying borrow with the First PREMIER® Bank Secured Credit Card. You can deposit up to $5,000 on the card, allowing you to use a credit card to make major purchases. It has a relatively low rate for a secured card. However, it does have an annual fee.
Cards designed for people limited or bad credit
After having a secured card and making your payments on time for six months to a year, your credit score will begin to improve. As your credit history gets better, you’ll be able to transition to a regular credit card, rather than just a secured card.
You might not be able to qualify for a low-interest card just yet — and some credit cards for bad credit can have high interest rates and fees — but if you practice good habits and pay off your balance in full every month, you won’t have to worry about interest charges. Over time, you can then upgrade to a competitive card with low interest rates and great rewards.
Some of the best cards for people with poor credit include:
1. Total Visa® Card
The Total Visa® Card is a card designed for those new to credit. A legitimate Visa® card, it gives you a small credit line of $300. The card does have a number of fees to be aware of, but if you need a credit card to start building your credit, it can be a smart option. As your credit improves, you can switch to a better Visa® card with fewer fees.
2. Net First Platinum
The Net First Platinum
card gives you a credit line as large as $500. Although the card boasts a 0.00% APR, you should know that it charges a monthly membership fee of $24.95. The high monthly fee means that this card can be a credit-building tool, but when possible, you should look to upgrade to another card.
3. Credit One Bank® Unsecured Visa® for Rebuilding Credit
The Credit One Bank® Unsecured Visa® for Rebuilding Credit is one of the few cards for people with bad credit that offers rewards. With this credit card, you can earn up to 1% cash back rewards automatically on eligible purchases, terms apply, putting money back in your pocket. Depending on your credit, you could qualify for an interest rate anywhere from 19.49% - 25.49% Variable APR. You could be eligible for an annual fee of anywhere from $0 - $99.
Getting a card
Getting a credit card when you have poor credit can be challenging, but there are options available that can help you establish good credit and boost your score. If you’re ready to apply for a card, make sure you compare rates and fees from several credit card companies to ensure you get the best deal.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.