Having bad credit can feel like a financial roadblock, especially when trying to access essential financial tools like credit cards. Luckily, there are credit card options designed specifically for individuals with less-than-perfect credit. This guide will explore the best credit cards available for bad credit in 2024, helping you rebuild your credit score and gain access to better financial opportunities.
| Card Name | Key Features | Potential Benefits |
|---|---|---|
| Capital One Platinum Secured Credit Card | Secured card, reports to all three credit bureaus, potential for credit line increase. | Excellent for rebuilding credit with responsible use. Security deposit is refundable. Potential for transition to an unsecured card with good payment history. No annual fee for some users. |
| Discover it® Secured Credit Card | Secured card, reports to all three credit bureaus, earns cashback rewards on purchases. | Rebuild credit while earning rewards. Cashback Match™ – Discover will automatically match all the cashback you’ve earned at the end of your first year! No annual fee. May graduate to an unsecured card. |
| OpenSky® Secured Visa Credit Card | Secured card, reports to all three credit bureaus, no credit check required. | Accessible even with very poor credit. Useful for those who have been denied other secured cards. Reports to all three major credit bureaus. Requires a security deposit. |
| Credit One Bank® Platinum Visa® for Rebuilding Credit | Unsecured card, reports to all three credit bureaus, designed for bad credit. | Unsecured option for those who may not be able to provide a security deposit. Reports to all three major credit bureaus. Can help rebuild credit with responsible use. Potentially high APR and fees. |
| Surge® Mastercard® | Unsecured card, reports to all three credit bureaus, designed for bad credit. | Unsecured option for those who may not be able to provide a security deposit. Reports to all three major credit bureaus. Can help rebuild credit with responsible use. Potentially high APR and fees. |
| Avant Credit Card | Unsecured card, reports to all three credit bureaus, designed for bad credit. | Unsecured option for those who may not be able to provide a security deposit. Reports to all three major credit bureaus. Can help rebuild credit with responsible use. Potentially high APR and fees. |
| Self - Credit Builder Loan with Secured Visa® Credit Card | Credit builder loan and secured card, reports to all three credit bureaus, builds credit history. | A unique approach to building credit. Helps build savings while simultaneously building credit. The secured card is available after a certain amount of loan payments. Reports to all three major credit bureaus. |
| Petal® 1 "No Annual Fee" Visa® Credit Card | Unsecured card, reports to all three credit bureaus, no annual fee, cash back rewards. | Unsecured option for those who may not be able to provide a security deposit. Reports to all three major credit bureaus. Can help rebuild credit with responsible use. Potentially high APR and fees. |
| Tomo Credit Card | Unsecured card, reports to all three credit bureaus, no annual fee, cash back rewards. | Unsecured option for those who may not be able to provide a security deposit. Reports to all three major credit bureaus. Can help rebuild credit with responsible use. Potentially high APR and fees. |
Detailed Explanations
Capital One Platinum Secured Credit Card:
This secured card is a solid choice for those looking to rebuild their credit. It requires a security deposit, which typically acts as your credit limit. Capital One reports your payment activity to all three major credit bureaus (Equifax, Experian, and TransUnion), helping you build a positive credit history with responsible use. Additionally, Capital One periodically reviews accounts for potential credit line increases, which can further benefit your credit score. Some users may even be eligible to transition to an unsecured card after demonstrating good payment behavior.
Discover it® Secured Credit Card:
Similar to the Capital One Platinum Secured card, the Discover it® Secured Credit Card requires a security deposit and reports to all three credit bureaus. However, a key differentiator is that it earns cashback rewards on purchases. This allows you to rebuild your credit while also earning some money back on your spending. Discover's Cashback Match™ program doubles all the cashback you earn in your first year, making it an even more attractive option. Like Capital One, Discover may also offer the opportunity to graduate to an unsecured card.
OpenSky® Secured Visa Credit Card:
The OpenSky® Secured Visa Credit Card stands out because it doesn't require a credit check. This makes it accessible to individuals with very poor credit or those who have been denied other secured cards. While it still requires a security deposit, the absence of a credit check can be a significant advantage for some. OpenSky also reports to all three major credit bureaus, allowing you to build credit history with on-time payments.
Credit One Bank® Platinum Visa® for Rebuilding Credit:
The Credit One Bank® Platinum Visa® is an unsecured credit card designed specifically for individuals with bad credit. Unlike secured cards, it doesn't require a security deposit. While this might seem appealing, it's important to be aware that unsecured cards for bad credit often come with higher interest rates (APR) and fees compared to secured cards. Credit One reports to all three major credit bureaus, allowing you to rebuild your credit, but it's crucial to use the card responsibly and pay your bills on time to avoid accumulating debt and further damaging your credit.
Surge® Mastercard®:
The Surge® Mastercard® is another unsecured credit card option targeted towards individuals with bad credit. Similar to the Credit One Bank® Platinum Visa®, it doesn't require a security deposit but typically comes with high APRs and fees. It reports to all three major credit bureaus, which can help you rebuild your credit history with responsible use. However, carefully review the terms and conditions before applying to ensure you understand the associated costs.
Avant Credit Card:
The Avant Credit Card provides another unsecured credit card option for individuals with less-than-perfect credit. Like other unsecured cards in this category, it reports to all three major credit bureaus, allowing you to work towards improving your credit score with on-time payments. While it doesn't require a security deposit, be prepared for potentially high APRs and fees. It's crucial to use the card responsibly and avoid carrying a balance to minimize interest charges.
Self - Credit Builder Loan with Secured Visa® Credit Card:
Self offers a unique approach to building credit with its Credit Builder Loan. Instead of directly applying for a credit card, you take out a loan with Self, and the payments you make on the loan are reported to all three major credit bureaus. As you make on-time payments, you're not only building your credit history but also building savings. After a certain amount of loan payments, you become eligible for a secured Visa® credit card from Self. This combined approach can be particularly effective for individuals who struggle with saving money and building credit simultaneously.
Petal® 1 "No Annual Fee" Visa® Credit Card:
The Petal® 1 "No Annual Fee" Visa® Credit Card presents an unsecured option for individuals with limited or bad credit. It distinguishes itself by offering cash back rewards and having no annual fee. Petal uses a unique "cash flow underwriting" approach, which considers your banking history and spending patterns in addition to your credit score, potentially increasing your chances of approval. It reports to all three major credit bureaus, allowing you to build credit while earning rewards.
Tomo Credit Card:
The Tomo Credit Card is an unsecured credit card that stands out by not requiring a credit score for approval. It focuses on your banking history and income to determine your creditworthiness. The Tomo card requires you to link your bank account and automatically pays off your balance each month. This promotes responsible spending habits and avoids the accumulation of debt. Tomo reports to all three major credit bureaus, helping you establish a positive credit history.
Frequently Asked Questions
What is a secured credit card?
A secured credit card requires a security deposit, which typically acts as your credit limit. This deposit protects the issuer in case you don't pay your bills.
What is an unsecured credit card?
An unsecured credit card doesn't require a security deposit. Approval is based on your creditworthiness, which can be challenging with bad credit.
How do credit cards for bad credit help rebuild my credit score?
By making on-time payments and keeping your credit utilization low (ideally below 30%), you can demonstrate responsible credit behavior, which helps improve your credit score over time.
What is APR?
APR stands for Annual Percentage Rate. It's the interest rate you'll be charged on any balances you carry on your credit card.
What is credit utilization?
Credit utilization is the amount of credit you're using compared to your total available credit. It's a significant factor in your credit score.
How long does it take to rebuild my credit score with a credit card?
The time it takes to rebuild your credit score varies depending on the severity of your credit issues and how responsibly you use your credit card. It typically takes several months to a year to see significant improvement.
Will applying for a credit card for bad credit hurt my credit score?
Applying for a credit card can result in a small, temporary dip in your credit score due to a hard inquiry. However, the long-term benefits of rebuilding your credit outweigh this temporary effect.
What are the best practices for using a credit card to rebuild credit?
Always pay your bills on time, keep your credit utilization low, and avoid applying for too many credit cards at once.
What happens if I miss a payment?
Missing a payment can negatively impact your credit score and result in late fees. Contact your issuer immediately to discuss options and avoid further damage to your credit.
Can I upgrade to a better credit card after rebuilding my credit?
Yes, after demonstrating responsible credit behavior, you may be eligible to upgrade to a better credit card with lower interest rates and better rewards.
Conclusion
Choosing the best credit card for bad credit requires careful consideration of your individual circumstances and financial goals. Secured cards like the Capital One Platinum Secured and Discover it® Secured Credit Card offer a relatively safe and effective way to rebuild credit while potentially earning rewards. Unsecured options like the Credit One Bank® Platinum Visa® and Surge® Mastercard® are available, but often come with higher fees and APRs. Ultimately, responsible use, including on-time payments and low credit utilization, is key to successfully rebuilding your credit score and accessing better financial opportunities in the future.