The Best Credit Cards for People with Bad Credit
The credit card industry designs credit cards for virtually all consumer categories including credit cards for people with bad credit, poor credit, fair credit and no credit (now over 25% of the US population according to FICO). Card types vary between issuers (such as First Progress, Continental Finance Matrix Discover®, and American Express) and include bad credit unsecured credit cards, secured cards and prepaid debit cards.
Consumers that potentially benefit most from this card type are those with lower credit scores, those with a less than stellar credit history and people with no credit history. As they say, “life happens” and many in this category have just hit bad times, experienced an expensive divorce or just made some regrettable decisions with money and credit. College students are also often in this category as they are new, young consumers with no credit history.
Bad credit does not mean “bad person” or “got no shot at good credit again” so here is a summary of the best credit cards available for people with bad credit:
Unsecured Credit Cards
Secured Credit CardsLike it sounds, this card requires “security” or some amount of money up front to secure your monthly credit limit. A secured credit card can be a good option for people that have had issues in the past and looking to rebuild credit. Credit card companies like this option as they have security (in case of default) and consumers like it because they are back in the business of building a positive credit and payment history.
Prepaid Debit CardsAlso like it sounds, a prepaid debit card is prepaid – you put a certain amount of cash on account and can charge against that amount. When you’ve depleted the balance you deposit more money and the cycle resumes. A prepaid debit card is similar to a bank debit card and a good, low cost option for those looking to forcibly spend within their means - which is always a great idea!
Best Credit Cards for Bad CreditThe best credit cards for bad credit depend on several things:
- Whether or not you can get approved for a bad credit unsecured credit card. The alternative is a secured card which requires you to put cash up as security;
- If you can get an unsecured card, will you pay off your balance each month? If so, the interest rate is probably less important and any fixed fees more important;
- If you plan to carry a balance, then a lower interest rate is likely a priority. Remember that a credit card designed for folks with bad credit will have a higher interest rate than those for people with better credit so you ask yourself why you plan to carry a balance. In other words, are you charging more than you can afford because you can’t help it? If so, at least you’re not in denial and may be better off with a prepaid debit card that will limit your purchases to whatever you can afford.
- If you do with a prepaid card then look at the fees and any of the other features on the card. American Express has a good reputation as a quality prepaid card provider.
Most Popular Credit Cards for People with a Low Credit Score
The most popular credit cards for folks with a low credit score are the ones on this page. There are more cards on the market but these are the ones consumers seem to get the most and we find the most popular.
Many people use unsecured, secured or prepaid cards to build credit. How? Assuming payments are made on time, people establish credit over time just by using a credit card. Establish credit and then “move up the ladder” to a better credit score and a fair credit status and then, hopefully, a good or excellent credit status.