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Top Credit Cards for Those With Bad Credit
5 Apr 2018

The Top Credit Cards for Those With Bad Credit

Are you one of the 68 million people with a poor or bad credit score? With the average American credit score being 687, it is likely you are.

If your credit score is 550 to 650, you have poor credit. If your score is below 550, you have very poor credit.

Having a credit card will help improve your bad credit. There is a combination of factors that are considered when determining your credit score.

Card Attributes

When choosing a credit card it is important to look at each card’s individual attributes. We are going to explain some common key features common for credit cards.

Very few cards will have all of the attributes listed below. The goal is to find the attributes that are most important to you and look for those with each card.

Once you decide which credit cards fit your needs, it’s important to fill out the request forms for them quickly. Your credit won’t be further hurt by shopping around if you do it simultaneously.

Annual fee

The annual fee is a charge the credit card company is going to add to your bill. Most bad credit credit cards will charge an annual fee.

Some cards will charge it all at once, once a year. Other cards will divide it into monthly installments on each bill.

Be careful, this fee will accrue interest if you do not pay it off one the bill it is charged.

Additional fees

Standard fees for a credit card are late payment and over-limit fees. Credit cards for bad credit will often have additional fees and higher rates.

Common additional fees include a monthly maintenance fee, balance transfer fee, cash advance fees, processing fees, and user fees.

Additional fees will be automatically added to your balance. You could start with a balance, or your monthly bill could be much higher than you expect.

Once fees are added to your balance owed they will accrue interest, drastically increasing the growth rate of your outstanding balance.

Some cards will charge a lower penalty fee for first offenses. The penalty rate will increase if you continually fail to make full payments or one-time payments.

APR

The average interest rate for people with bad credit is 19 percent for secured cards and 29 percent for unsecured cards.

We will discuss later the difference between secured and unsecured cards.

Penalty APR

Look for a card without a penalty APR. This is an additional fee percent on top of your original APR.

A penalty APR can be an additional 6-8 percent on top of your original APR.

If you do choose a card with a penalty APR; check if it is indefinite or can be removed after a certain number of on-time payments.

Foreign transaction fee

The only reason you should be concerned about a foreign transaction fee is if you plan on making a lot of international transactions.

These can be from traveling internationally or shopping on foreign websites.

Possible credit limit increases

Often bad credit card cards will start with a low credit limit. Once you prove responsibility for your purchasing and repayments, many credit cards with increase your credit limit.

Having a high limit on your credit card will also assist in improving your credit score.

Reporting to three bureaus

The purpose of getting a credit card, using it, and making on-time payments is so that the creditor will report your positive credit activity to the three major credit bureaus. Look for a creditor that reports to Equifax, Experian, and TransUnion.

If the card you chose does not report to these agencies, you are not repairing your credit.

Many cards will offer credit score reporting, making it easier for you to track your progress improving your bad credit score.

Rewards

Look for a credit card that offers rewards that are relevant to you. This could be gas rewards, cash back, or travel rewards.

You will already be using the card to help build your credit. Use your purchasing to earn added benefits.

Automatic upgrade to unsecured

When you decide a secured credit card is right for you, ask if there is an automatic upgrade to unsecured option.

If you are approved for the upgrade, your deposit will be refunded and the restrictions on your account are removed.

Your credit card will grow with you and your credit score. You will not have to request a new credit card and have another hard inquiry.

Prequalification

You can request a soft inquiry by the creditor which will not hurt your credit score. When you fill out the request form you are likely to be approved if you secured approval through prequalification.

Unsecured

An unsecured credit card is the most common type of credit card. You do not need to pay a deposit before you can start using the card.

For people with bad credit, this type of card may be more accessible since they do not require a security deposit. A higher credit limit can also be obtained.

For people with bad credit, an unsecured credit card will have higher interest rates, high annual fees, and monthly maintenance fees.

Secured

A secured credit card requires the user to make a deposit before they can use the card. People with no or bad credit will find it easier to obtain a secured credit card.

A secured credit card will either require a particular dollar amount or a percentage of the credit limit.

The benefits for people with bad credit is easier approval with no credit check and a lower APR.

The negatives for people with bad credit is that the security deposit is often high and your credit limit will be low.

By dedicating a little bit of time now to read through each credit card, you are improving your financial future in the long wrong.

Credit One Bank Platinum Visa with Cash Back Rewards

  • This is an unsecured credit card with the ability to pre-qualify in less than a minute.
  • Pre-qualify before a hard request of your credit score is submitted.
  • Automatic account reviews allow for possible credit line increases. A fee may apply.
  • APR of 17.24%-25.24%
  • There could be an annual fee of $0-$75.
  • Penalty fees for late payments could be up to $37.
  • Ability to see if you pre-qualify before a hard inquiry of your credit score.
  • Offers rewards of 1% cash back on eligible purchases.
  • Access to account information online

First Progress Platinum Elite MasterCard Secured Credit Card

  • A secured credit card requiring minimum credit score for approval.
  • Will require a deposit before initial use of $200-$,2000.
  • Once you pay off your balance, you may receive your deposit back at any time.
  • Reports to all three major credit reporting agencies every month.
  • APR of 19.99%
  • Annual fee of $29
  • A late payment fee of $27, but could be up to $38 depending on how many times you’ve been late making payment.
  • Returned payment fee of up to $27
  • Telephone payment fee of $10
  • 24/7 Online Access to Your Account

First Progress Platinum Select MasterCard Secured Credit Card

  • A secured credit card requiring minimum credit score for approval.
  • Will require a deposit before initial use of $200-$,2000.
  • Once you pay off your balance, you may receive your deposit back at any time.
  • Reports to all three major credit reporting agencies every month.
  • APR of 14.99%
  • Annual fee of $39
  • A late payment fee of $27, but could be up to $38 depending on how many times you’ve been late making payment.
  • Returned payment fee of up to $27
  • Telephone payment fee of $10
  • 24/7 Online Access to Your Account

First Progress Platinum Prestige MasterCard Secured Credit Card

  • A secured credit card requiring minimum credit score for approval.
  • Will require a deposit before initial use of $200-$,2000.
  • Once you pay off your balance, you may receive your deposit back at any time.
  • Reports to all three major credit reporting agencies every month.
  • APR of 11.99%
  • Annual fee of $44
  • A late payment fee of $27, but could be up to $38 depending on how many times you’ve been late making payment.
  • Returned payment fee of up to $27
  • Telephone payment fee of $10
  • 24/7 Online Access to Your Account

Capital One Secured Mastercard

  • A secured credit card with a required security deposit of $49, $99, or $200 based on your creditworthiness.
  • Once you make the required deposit, you’ll receive an initial credit line of $200.
  • You have the ability to obtain a higher credit line by making an additional deposit before your account opens.
  • All three major credit bureaus will receive monthly reporting.
  • There is no annual fee.
  • An APR with 24.99%.
  • Once you make your first five monthly payments on time, you’ll have the ability to increase your credit line.
  • Have the ability to pick your own monthly due date and payment method.
  • You will have all the benefits of having a Platinum Mastercard. Including extended warranty, auto rental insurance, travel accident insurance, 24-hour travel assistance, 24-hour roadside assistance, and price protection.

OpenSky Secured Credit Visa Card

  • A secured credit card secured by a deposit made before your account is opened.
  • Have the ability to choose your own credit line from as low as $200 and up to $3,000.
  • Your deposit with me held in an FDIC insured account and returned when you close your account. There is no opportunity to earn it back through on-time payments.
  • No credit check is required and no checking account is required.
  • The application process takes less than 5 minutes.
  • OpenSky offers monthly reporting to all three major credit reporting agencies.
  • Annual Fee of $35
  • APR rate of 18.39%
  • This card offers a Facebook community for its customers to share experiences and insights.
  • OpenSky is dedicated to educating its customers on rebuilding bad credit and credit responsibility.

Merrick Bank Double Your Line Visa Credit Card

  • Have the ability to pre-qualify without a hard inquiry to your credit score in less than sixty seconds.
  • Get your monthly FICO score free each month directly from the credit reporting bureau.
  • Double your credit line when you make your minimum payment on time for the first seven months your account is open. This increase is automatic and will help you maintain a healthier credit utilization ratio.
  • There are no penalty rates
  • There are no “up to” credit lines.
  • No Over your limit penalty fees
  • Online and mobile Account Access.
  • $0 Fraud Liability protects you from unauthorized charges.

Discover it Secured Card

  • A secured credit card where you get to choose your deposit amount.
  • You will need to provide your bank information when submitting your security deposit.
  • You have two options for receiving a refund. When you close your account you will receive a full refund.
  • Your account will be automatically reviewed monthly after eight months of responsible use. A refund of your deposit and transition of your card to an unsecured status is possible.
  • Monthly statements that include your FICO score.
  • APR of 24.24%
  • There is no annual fee.
  • Earn 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cash back on all your other purchases.
  • Automatically earn cash back matching at the end of your first year.
  • Free Social Security number monitoring of thousands of risky websites.
  • Mobile account management.

If you have the ability to make a large up-front deposit, then a secured credit card would be the wiser option. Look for a card that has an automatic transition to unsecured.

You will receive your deposit back sooner and you won’t have to fill out a request for a new credit card that could possibly ding your progress repairing your bad credit.

Be patient when waiting to see results from your credit card reporting to credit reporting agencies. It can take at least six months before you start to see an improvement in your bad credit score.

Penalty fees may not be a concern if you have the ability to pay your minimum payment on time each month. It’s important to remember that these are added to your monthly balance and interest is charged on them.

The amount you owe can balloon quickly once penalty fees start being added.

Set a realistic goal for improving your bad credit score. Follow these 10 simple tips for lowering your monthly payment and stay on track.