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Many people with poor credit believe that they cannot qualify for a credit card.
And while it’s true that there are some top cash back and travel cards that will be out-of-reach for people with bad or limited credit, there are some cards that welcome those with a less-than-stellar score.
There are also people with bad credit who believe that they shouldn’t get a credit card.
This is unfortunate because there are actually significant benefits to responsible credit card use, especially for those who have poor or limited credit.
Before we discuss our list of the five best credit cards for bad or limited credit, we will go over the benefits of getting a credit card when you have bad or limited credit as well as the types of credit cards — secured and unsecured — available to people with bad or limited credit.
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3 Benefits of Getting a Credit Card When You Have Bad Credit
Look, many people get themselves in trouble with credit cards.
This is why many financial “gurus” tell you to avoid credit cards at all costs.
But the reality is that credit scores are just a tool.
When they are used poorly and irresponsibly, they can mess you up financially.
However, when used correctly and responsibly, they can benefit your financial life tremendously.
Here are three benefits of getting a credit card when you have bad credit.
1. Credit Score Boost
Credit cards are one of the quickest ways to establish or boost a credit score.
If you make sure to use your card on a regular basis and pay it off every month, you will be on your way to a higher credit score.
2. Rewards
Credit cards can be an incredibly way to rewards with every purchase.
While rewards aren’t available on most credit cards that are accessible to people with bad credit, there is an exception: the Capital One® QuicksilverOne® Cash Rewards Credit Card gives you 1.5% cash back on all purchases.
Also, after you’ve used a card on this list for a while and have built your credit score, you may be eligible for a premium travel card so you can travel for free!
3. Fraud Protection
If you pay for something with cash or a debit card, and the transaction turns out to be fraudulent, it can be quite difficult to get your money back.
However, with a credit card — because no cash has actually changed hands at the time of purchase — you have much more power to contest fraudulent transactions.
In fact, if you suspect fraud on your card, then in most cases the situation can be remedied in a few minutes with a phone call to your credit card company.
Secured vs. Unsecured Cards
There are two options when it comes to credit cards available to people with bad or limited credit: secured cards and unsecured cards.
1. Secured Cards
By extending credit to someone with poor or limited credit, banks are taking a risk.
Your credit score would indicate that you may not have been the best when it comes to paying off your obligations in the past.
So to make up for this risk, banks require — on certain cards — that you put up a deposit before you are extended credit.
This will protect the bank in case you do not pay off your bill.
These are the secured cards featured on our list below:
2. Unsecured Cards
Unsecured cards do not have a deposit requirement.
Most credit cards are unsecured cards.
However, although you don’t have to put up a deposit with these kinds of cards, it’s generally more difficult to be approved for an unsecured card than it is for a secured card.
These are the unsecured cards featured on our list below:
- Capital One® QuicksilverOne® Cash Rewards Credit Card
- Capital One® Platinum Credit Card
- Upgrade Card
5 Best Credit Cards for Bad or Limited Credit
Capital One Secured Mastercard
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Capital One Secured Mastercard®: Best OverallLearn MoreWe earn a commission on this offer.
- Basics: The Capital One Secured Mastercard gives you an initial $200 credit line when you make your required $49, $99, or $200 refundable minimum security deposit. In as little as 6 months, you are automatically considered for a higher credit line.
- Pros: The initial minimum security deposits aren't huge, and you're automatically considered for more credit after only six months. Also, Capital One reports to all three credit bureaus.
- Cons: The card is secured, which means that you have to put up an initial security deposit.
- Type of Card
Secured
- Annual Fee
$0
- Credit Score
Bad, Limited
OpenSky Secured Visa
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OpenSky Secured Visa: Best with No Credit CheckLearn MoreWe earn a commission on this offer.
- Basics: The OpenSky Secured Visa Credit Card gives you an initial credit line equal to the security deposit you make on the card.
- Pros: There is no credit check to apply. Also, OpenSky reports to all three credit bureaus, so responsibly using this card is an important step toward increasing your credit score.
- Cons: The card is secured, which means that you have to put up an initial security deposit. And unlike the Capital One Secured Mastercard, which can potentially give you a $200 credit line with only a $49 deposit, the OpenSky Secured Visa will only give you a credit limit equal to your deposit.
- Type of Card
Secured
- Annual Fee
$35
- Credit Score
Any (No Credit Check)
Capital One QuicksilverOne
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Capital One QuicksilverOne Cash Rewards Credit Card: Best for Cash BackLearn MoreWe earn a commission on this offer.
- Basics: This card gives those with less-than-perfect credit the opportunity to earn unlimited 1.5% cash back on all purchases with a low $39 annual fee.
- Pros: Unlike other cards on this list, this one gives you rewards in the form of 1.5% cash back. So if you spend $6,000 annually on this card, you will earn $90 cash back. Netted with the annual fee of $39, you will end up with $51 back in your pocket. Make sure you are able to put at least $2,600 on this card annually or you will earn less cash back than the annual fee.
- Cons: It may be more difficult to be approved for this card than for the Capital One Secured Mastercard or the OpenSky Secured Visa. Also, unlike the other cards on this list, this card has an annual fee.
- Type of Card
Unsecured
- Annual Fee
$39
- Credit Score
Average, Fair, Limited
Capital One Platinum Card
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Capital One Platinum Credit Card: Best Unsecured with No Annual FeeLearn MoreWe earn a commission on this offer.
- Basics: The Capital One Platinum Card allows those with limited credit to access a credit line without putting up a security deposit and without paying an annual fee.
- Pros: You are considered automatically for a higher credit line — again, without putting up a deposit — in as little as 6 months. Also, Capital One reports to all three credit bureaus, so responsibly using this card is an important step toward increasing your credit score. Check out quickly and securely with the contactless card, just hover the card on a contactless reader.
- Cons: It may be more difficult to be approved for this card than for the Capital One Secured Mastercard or the OpenSky Secured Visa. However, unlike the other cards on this list, the OpenSky Secured Visa card has an annual fee.
- Type of Card
Unsecured
- Annual Fee
$0
- Credit Score
Average, Fair, Limited
Upgrade Card
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Upgrade Card: Best Unsecured with No Annual FeeLearn MoreWe earn a commission on this offer.
- Basics: The Upgrade Card is unique in that it is more personal loan than traditional credit card, offering lines from $500 to $20,000.
- Pros: Because the Upgrade Card is essentially a personal loan, you have fixed terms and rates for a more predictable payback plan.
- Cons: You can't make online payments, and it may be more difficult to be approved for the Upgrade Card than for the Capital One Secured Mastercard or the OpenSky Secured Visa.
- Type of Card
Personal Loan
- Annual Fee
$0
- Credit Score
Fair
Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
