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Having a bad credit score makes it harder to get approved for the best credit cards and other types of loans, and it means that when you do get approved for, say, a mortgage, you'll generally get less-favorable terms like the highest variable interest rates.

Best Credit Cards for Bad Credit

Here are some of the best credit cards to consider if you have bad credit, whether you're starting from scratch or are working on rebuilding your credit

Compare Credit Cards for Bad Credit

Credit Cards for Bad Credit Frequently Asked Questions 

If your credit is in poor shape, picking up a credit card can help if you use it to your advantage. These questions and answers can help you get approved for a credit card for bad credit, then use it to improve your credit score over time.

How do I know if I have bad credit?

The best way to find out if you have bad credit is to check your credit score for free online. According to myFICO.com, poor credit is typically considered any FICO score below 580. Meanwhile, "fair credit" is considered any FICO score between 580 and 669.

How can a credit card help me build credit?

Credit cards help you build credit by reporting your credit movements to the three credit bureaus. To build credit with a credit card, all you have to do is use your card for purchases you can afford to pay off. From there, pay your credit card bill early or on time each month. Over time, your positive credit usage will help boost your score.

How do I get a credit card with bad credit?

To get a credit card if your credit is bad, a great first step is knowing your credit score to find out which cards you qualify for. From there, you could consider a card specifically geared to those who are working on building or repairing their credit score. Or, have a look at secured credit cards, which are typically easier to get.

What is a secured credit card?

A secured credit card is a type of credit card that requires a cash deposit as collateral. The cash deposit you put down is typically equal to or close to the line of credit you qualify for, meaning you'll get a $500 line of credit if you put down $500 in cash to get started.

While putting down collateral may not seem ideal, secured credit cards are considerably easier to get approved for when you have bad credit or limited credit history.

How do I avoid credit card interest?

To avoid paying interest on purchases made with a credit card, you need to pay your credit card statement balance in full each month. You'll only be charged interest on balances you carry from one month to the next, so you should strive to avoid this.

Which credit card fees should I watch out for?

Try to pick a no-annual-fee credit card. Other credit card fees to watch out for include application fees, late fees, balance transfer fees, cash advance fees, and over-the-limit fees.

Does Amex offer a secured credit card?

American Express doesn't currently offer a secured credit card as most Amex cards require you to have a good to excellent credit score. But if you need a secured card, there are plenty of other banks that offer them, including Capital One, Bank of America, and US Bank.

Does Chase offer a secured credit card?

Chase doesn't offer any secured credit cards, but it does have the new Chase Freedom Rise℠ - Product Name Only, which can be easier to get if you're just starting out with credit. This is a good choice if you later want to graduate to opening valuable Chase cards, like the Chase Sapphire Preferred® Card. Here's more about the Chase Freedom Rise credit card to help you decide if it's a good option for you.

Discover it® Secured Credit Card - Product Name Only

The Discover it® Secured is one of the best secured credit cards on the market today, because not only is there no annual fee, but you also get the opportunity to earn rewards. You'll need to put down a cash deposit to get started, and you'll secure a line of credit equal to that amount that you can use to begin building a responsible credit history.

If you use your card responsibly, you can also get your deposit back when you close or upgrade your account in good standing. Automatic reviews start at seven months to see if Discover can transition you to an unsecured line of credit and return your deposit.

In terms of rewards, the Discover it® Secured lets you earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter (then 1%), plus 1% back on all other purchases. Even better, Discover will match all the rewards you earn at the end of your first year through the Discover Cash Back Match program.

The Discover it® Secured also gives you a free FICO score on your monthly credit card bill, and you can use this information to monitor your score as you improve your credit over time.

Discover it Secured Credit Card Review 

Capital One Quicksilver Secured Cash Rewards Credit Card - Product Name Only

The no-annual-fee Capital One Quicksilver Secured Cash Rewards Credit Card is a secured credit card that earns a straightforward 1.5% cash back on all purchases with no limits. This is a great card for folks with a fair credit score or limited credit history (less than three years) including students, people new to the US, or authorized users on someone else's credit card — or those who have defaulted on a loan in the past five years.

To receive a $200 credit line, you'll need to make an initial minimum deposit of $200, but depending on your creditworthiness you could get approved for a higher credit line with a larger deposit. You may be eligible for a higher credit limit after as little as six months of on-time payments. 

Capital One Quicksilver Secured Card Review

U.S. Bank Cash+® Visa® Secured Card - Product Name Only

The U.S. Bank Cash+® Visa® Secured Card shares most of the features of its big sibling, the U.S. Bank Cash+® Visa Signature® Card, except it doesn't come with a welcome bonus and requires a security deposit. Because it's a secured card, you'll need to put down a deposit of $300 to $5,000 after you're approved, and that amount becomes your credit limit.

This card is a great choice if you want to maximize your rewards earning by choosing your own bonus categories. You can earn 5% cash back in two eligible categories of your choice, on up to $2,000 in combined spending each quarter (then 1%) from the following list:

  • Fast food
  • Home utilities 
  • TV, internet, and streaming services
  • Department stores
  • Electronic stores
  • Cell phone providers
  • Sporting goods stores
  • Furniture stores
  • Movie theaters
  • Gyms and fitness centers
  • Ground transportation
  • Select clothing stores

In addition, cardholders can choose one "everyday" 2% cash back category from grocery stores, gas stations, EV charging stations, or restaurants. All other purchases earn 1% cash back, with no limits.

It's unusual to see a no-annual-fee secured credit card with such high earning rates, so if the card's categories match up with your spending, it's an excellent choice. US Bank also says that if you spend within your credit limit and pay your bill on time to build your credit, you may be able to automatically "graduate" to the U.S. Bank Cash+® Visa Signature® Card. Upon graduation, your security deposit will be returned. After that, you'll get back your security deposit.

US Bank Cash Plus Secured Credit Card Review

U.S. Bank Altitude® Go Visa® Secured Card - Product Name Only

If you spend a lot on dining, the no-annual-fee U.S. Bank Altitude® Go Visa® Secured Card is hard to beat. Cardholders earn 4x points on takeout, food delivery, and dining, 2x points at grocery stores, grocery delivery, streaming services, and gas stations (including EV charging), and 1 point per dollar on all other eligible purchases.

Each point is worth 1 cent toward travel, merchandise, gift cards, cash back, or statement credits through the card's online rewards portal. The card also offers the opportunity to earn an automatic $15 credit each year when you pay for eligible streaming services for 11 consecutive calendar months. 

Again, this card is most similar to the non-secured U.S. Bank Altitude® Go Visa Signature® Card, except it doesn't offer a welcome bonus and requires a security deposit of $300 to $5,000 (which becomes the amount of your credit limit). And with responsible use, you may be able to convert to the U.S. Bank Altitude® Go Visa Signature® Card and have your security deposit returned in the future.

US Bank Altitude Go Secured Credit Card Review

Bank of America® Customized Cash Rewards Secured Credit Card - Product Name Only

The Bank of America® Customized Cash Rewards Secured Credit Card is another good option for maximizing your rewards earning. You'll earn 2% cash back at grocery stores and wholesale clubs, and can earn 3% cash back on up to $2,500 in spending each quarter (combined with 2% categories, then 1%) in one category you pick from the following list:

  • Gas
  • Online shopping
  • Dining
  • Travel
  • Drug stores
  • Home improvement/furnishings

All other purchases earn 1% cash back. 

This card is an especially good choice if you're a Bank of America Preferred Rewards member, because depending on your rewards tier, you could earn anywhere from 25% to 75% more rewards for your spending.

Because it's a secured card, you'll have to put down a security deposit (minimum $200), the amount of which will become your credit limit. Bank of America says it will periodically review your account and based on your overall credit history, you may be able to have your security deposit returned.

Bank of America Customized Cash Rewards Secured Credit Card Review

Discover it® Student Cash Back - Product Name Only

The Discover it® Student Cash Back is specifically geared to students with limited credit history, so it may be considerably easier to qualify for when compared to other unsecured credit cards. You won't pay an annual fee for this card, and you won't pay a late fee on your first late payment.

You can also earn rewards with the Discover it® Student Cash Back by enrolling each quarter to earn 5% cash back on up to $1,500 spent in quarterly rotating bonus categories (then 1%), and 1% back on all other purchases Discover It Cashback rotation. Like with its other cash-back credit cards, Discover will also match all the rewards you earn the first year.

Discover it Student Cash Back Card Review 

Petal® 2 "Cash Back, No Fees" Visa® Credit Card - Product Name Only

The Petal® 2 "Cash Back, No Fees" Visa® Credit Card is a step up from the Petal® 1 "No Annual Fee" Visa® Credit Card and is designed for consumers with limited credit histories who need help building credit. This card comes with no annual fee and no hidden fees, yet it's a Visa credit card that can be used anywhere Visa is accepted worldwide. Not only that, but you may be able to qualify for a credit limit of up to $10,000 based on your credit profile, and you'll earn rewards on your spending.

Cash back on eligible purchases is initially offered at 1%, but you'll graduate to earning 1.25% back after six on-time payments then 1.5% back once you've made 12 on-time payments on your card. This credit card also works in conjunction with a handy app that helps you track your spending and set a budget for the month, and usage of the app is also free.

Petal 2 Visa Credit Card Review

Capital One Platinum Secured Credit Card - Product Name Only

If you don't want to put down a big security deposit, the Capital One Platinum Secured Credit Card is worth a look. There's no annual fee, and you can start with a $49, $99, or $200 security deposit to open your account (with a credit line of $200). You'll also have the option to increase your initial credit line by depositing more than the minimum amount, up to a maximum limit of $1,000.

The card doesn't earn rewards, but there's no annual fee and no foreign transaction fees. After you show responsible use of your card over time, Capital One may consider upgrading you to the regular Capital One Platinum Card and return your security deposit.

The Capital One Platinum Secured Credit Card comes with a few perks like $0 fraud liability for unauthorized charges, CreditWise, Card Lock, 24/7 customer service, and AutoPay features. 

Capital One Platinum Secured Credit Card Review

Capital One Platinum Credit Card - Product Name Only

Unlike most other card issuers, Capital One indicates what type of credit score you need to get approved for each of its cards. The Capital One Platinum Card is for "average credit," which Capital One defines as having defaulted on a loan in the past five years or "limited credit history" (defined as having a credit card or other credit for less than three years).

This card doesn't offer any rewards, but it is an unsecured credit card, meaning you don't have to put down a cash deposit as collateral. There's also no annual fee and no foreign transaction fees.

You may have to start out with a relatively low line of credit, but Capital One promises to reevaluate your credit line after you've made six on-time monthly payments.

Capital One Platinum Card Review

How to Choose a Credit Card for Bad Credit

Before you pick the best credit card for your situation, you'll want to decide if you want a secured or unsecured credit card.

Secured credit cards are particularly easy to get approved for because you put up a cash deposit as collateral to get started. However, there are also unsecured credit cards for bad credit tailored to those looking to repair or build their credit.

You'll also want to consider how and where you'll be using the card. A rewards-earning credit card is ideal, because you can get a little something back from every purchase. But if that seems too complicated and you just want a basic card to help build your credit, that's fine too.

Using a card responsibly will help boost your credit over time, since keeping your credit utilization low and making on-time payments are the two biggest factors used in calculating your credit score. Once you have your finances on track and your credit score keeps climbing, it's only a matter of time before you can get one of the best rewards credit cards offering bonus points and other enticing perks.

Read the original article on Business Insider