5 best credit cards for bad credit in September 2024
Published 8:31 PM EDT, Wed March 20, 2024
The best credit cards for bad credit can all help you do one thing: catapult into the good credit category. While having bad credit means your options for credit cards may be limited, there are still cards that can help you rebuild your financial profile without charging you hefty fees. Some even earn rewards and come with benefits such as travel insurance and no foreign transaction fees. Read on to learn more about credit cards for bad credit and how you can determine the best pick for your wallet.
Our team of experts reviewed dozens of credit cards for bad credit, considering various factors including fees, rewards, annual percentage rates (APRs) and benefits. Using a data-based approach, we narrowed down the list to the top five credit cards that scored highly based on our weightings. Read our full methodology below.
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Discover it? Secured Credit Card: *Best credit card for bad credit
The information for the Discover it? Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
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Capital One SavorOne Student Cash Rewards Credit Card: Best for students
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U.S. Bank Cash+? Secured Visa? Card: *Best for a high rewards rate
The information for the U.S. Bank Cash+? Secured Visa? Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
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U.S. Bank Altitude? Go Secured Visa? Card: *Best for dining
The information for the U.S. Bank Altitude? Go Secured Visa? Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
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Bank of America? Customized Cash Rewards Secured Credit Card: *Best for choosing your own bonus category
The information for the Bank of America? Customized Cash Rewards Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
Discover it? Secured Credit Card
*The information for the Discover it? Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
The CNN Underscored Money editorial team has developed a star rating so you can see the best card for specific categories. While we believe this card excels in this category, its overall star rating may differ.
Capital One SavorOne Student Cash Rewards Credit Card
The CNN Underscored Money editorial team has developed a star rating so you can see the best card for specific categories. While we believe this card excels in this category, its overall star rating may differ.
U.S. Bank Cash+? Secured Visa? Card
*The information for the U.S. Bank Cash+? Secured Visa? Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
The CNN Underscored Money editorial team has developed a star rating so you can see the best card for specific categories. While we believe this card excels in this category, its overall star rating may differ.
U.S. Bank Altitude? Go Secured Visa? Card
*The information for the U.S. Bank Altitude? Go Secured Visa? Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
The CNN Underscored Money editorial team has developed a star rating so you can see the best card for specific categories. While we believe this card excels in this category, its overall star rating may differ.
Bank of America? Customized Cash Rewards Secured Credit Card
*The information for the Bank of America? Customized Cash Rewards Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
The CNN Underscored Money editorial team has developed a star rating so you can see the best card for specific categories. While we believe this card excels in this category, its overall star rating may differ.
Our picks at a glance
| ? | Annual fee | Secured or unsecured | Minimum security deposit | Is pre-approval available? |
|---|---|---|---|---|
Discover it? Secured Credit Card
*
The information for the Discover it? Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
| $0
| Secured
| $200
| Yes
|
Capital One SavorOne Student Cash Rewards Credit Card
| $0
| Unsecured
| N/A
| Yes
|
U.S. Bank Cash+? Secured Visa? Card
*
The information for the U.S. Bank Cash+? Secured Visa? Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
| $0
| Secured
| $300
| No
|
U.S. Bank Altitude? Go Secured Visa? Card
*
The information for the U.S. Bank Altitude? Go Secured Visa? Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
| $0
| Secured
| $300
| No
|
Bank of America? Customized Cash Rewards Secured Credit Card
*
The information for the Bank of America? Customized Cash Rewards Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer.
| $0
| Secured
| $200
| Yes
|
What is bad credit?
Understanding bad credit and its impacts is an important first step toward getting on the right track in your financial journey. Here are the facts:
- Bad credit means a FICO score lower than 580. Lenders typically use FICO scores or VantageScore credit scores to evaluate borrowers. A FICO score lower than 580 puts you in the lowest class of credit scores, while a VantageScore lower than 600 puts you in bad territory.
- Bad credit typically comes from financial missteps. Usually, bad credit involves a history of issues like late payments and maxed-out credit cards, bigger problems like bankruptcy or simply a short credit history.
- Bad credit leads to high costs. Some lenders may charge extra fees and higher interest rates to borrowers with bad credit.
- Bad credit takes time to improve. The most impactful negative marks can remain on your credit report for seven years, though they may affect your scores less as time passes.
- Bad credit doesn’t have to be forever. Making on-time payments and keeping your credit utilization low can help rebuild your credit.
How bad credit affects your credit card options
If you have a history of failing to make payments to other lenders, credit card issuers may not want to take another chance on you. And even if they decide to issue you a card, credit cards for bad credit aren’t going to come with perks you’ll hear about in advertisements, such as large sign-up bonuses or luxury travel benefits. In some cases, you may even need to make a cash deposit that guarantees the card and acts as your credit limit.
Secured vs. unsecured credit cards
If you have good credit, you can likely get an unsecured credit card. This means that a lender doesn’t have any claim to your assets if you don’t make your payments. It’s also why credit card interest rates tend to be higher than interest rates for loans that have collateral. With auto loans and home loans, for example, the lender can take ownership of the car or the house if you stop making payments.
If you’re looking for credit cards for bad credit, you may need to apply for a secured credit card. This means that you’re going to need to “secure” the card with a cash deposit. For example, you might make a $400 security deposit when you apply in exchange for a $400 credit limit. Even with collateral, you may still see high interest rates with secured credit cards.
As long as your security deposit is labeled as refundable and you make your payments on time, you should eventually get that money back. However, it may take a while for the lender to feel comfortable enough to upgrade you to an unsecured credit card, and there’s no rule that a lender must offer an upgrade option. That may be frustrating, but secured credit cards can be a great route for anyone with bad credit. Lenders are more likely to approve an application with a security deposit.
The benefits of having a credit card when you have bad credit
While plenty of credit cards for bad credit charge high interest rates and extra fees, having one in your wallet still comes with upsides:
- A chance to increase your credit scores: If you pay off your credit card on time each month, your credit scores can go up. And if you keep the balance on your card low (ideally below 30% of your credit limit on the card, and across all of your cards), that can help your score, too. Having a credit card is an opportunity to demonstrate that you have learned from any missteps in the past and that you’re serious about being responsible with your finances.
- Fraud protection: Most credit cards come with zero-liability coverage, which means that you aren’t responsible for unauthorized charges after you lose your card or someone steals it. With debit cards, your protection won’t necessarily be as strong.
- Convenience: Instead of regularly withdrawing cash with a debit card or loading funds onto a prepaid card, a credit card can make paying for purchases much easier.
- Rewards: While most credit cards for bad credit aren’t designed to help you rack up rewards, there are some exceptions. For example, the Discover it? Secured Credit Card offers 1% cash back on most purchases, plus 2% cash back at restaurants and gas stations (capped at $1,000 in combined spending each quarter, then 1% back).
Disadvantages of credit cards for bad credit
Even the best credit cards for bad credit can come with some downsides, including:
- High interest rates: Credit cards for borrowers with bad credit may have above-average annual percentage rates. Some cards for bad credit charge rates above 30%, so if you wind up carrying a balance, you could be dealing with some very high-cost debt.
- Low credit lines: With a credit card for bad credit, don’t expect to get much of a credit limit to work with initially, and don’t plan on using your card to make any large purchases.
- Spending temptation: Credit cards can be a slippery slope, and if you have bad credit, you may have already slid down that slope in the past. You’ll need to stay laser-focused on your budget and pay your balance in full each month.
- Potential for an upfront security deposit: Secured credit cards will tie up a chunk of cash for a while. Your issuer may hang on to that deposit for at least six months before feeling confident enough to return it.
How to improve your credit score while using a credit card for bad credit
Follow these three rules to improve your credit scores while using a bad credit credit card:
- Pay your balance on time. Your payment history is the most important factor in your credit score. Set a reminder in your calendar well before the due date to make sure your bill gets paid on time.
- Keep your credit utilization low. Your credit utilization ratio reflects how much of your credit limit you’re using versus how much is available. For example, if your credit limit is $500 and your current balance is $400, your ratio is 80% — far too high for lenders to feel good about your spending habits. Ideally, aim for a credit utilization of 30% or lower on each card you have and across all of your cards.
- Don’t close the card — even when you’re ready to stop using it. While you might be chasing the ability to open a more lucrative rewards card, don’t close this card for bad credit. The length of your credit history affects your credit score, so this account can help your profile well into the future.
How to choose a credit card for bad credit
To find the best credit card to help you improve your credit, start by asking the lender if it reports to all three major credit bureaus — Experian, Equifax and TransUnion.
Then, it’s time to compare the fine print of each card. Start with the fees. You should avoid any card that charges an annual fee. Additionally, if you’re planning on being outside the US, look for a card that does not charge foreign transaction fees.
If it’s a secured credit card, make sure you’re comfortable with the amount of money you need to deposit. You’ll need to stay current on all your other bills at the same time, so you need to make sure you have a cash cushion.
It’s important to look into the future, too. Find out if the lender offers automatic reviews for credit limit increases and/or card upgrades. You don’t want to use a bad credit credit card forever; you want to be in the running for a better card that offers rewards and bigger benefits.
Credit cards to avoid
None of the best credit cards for bad credit that made our list charge an annual fee, but plenty of others do. Be wary of annual fees, program fees or other built-in costs; you should only consider these cards if you aren’t able to get approved for a no annual fee credit card.
You should also read a card’s terms and conditions to check its APR before you apply. Many credit cards for bad credit charge APRs that are well above average — sometimes more than 35%.
For example, the Premier Bankcard? Mastercard? has a purchase APR of 36%, and it only gets worse from there. In addition to a one-time program fee of up to $95, it charges an annual fee of up to $125 in the first year and up to $49 per year after that. It also tacks on a monthly fee and a fee of 25% of the amount of any credit limit increase you receive.
Even with a bad credit score, you can do better than that. If you’re not qualifying for no fee cards, you can also consider another way to build your credit score, such as taking out a credit builder loan.
Keep in mind that all of our top picks earn rewards, but many credit cards for bad credit don’t. All else being equal, choosing a rewards-earning card makes the most sense because you’ll get a little something back for every purchase you make.
How to apply for a credit card for bad credit
Applying for a credit card for bad credit is just like opening a regular credit card. The simplest route is to do so online on the issuer’s website, but you may also be able to apply in a branch or by phone. You’ll need to have personal information handy, including your Social Security number, contact information, citizenship status, annual income and employment status.
If you open a secured credit card, you’ll also need money for your security deposit. Typically, this involves providing your bank routing and account number to transfer funds to your card’s issuer.
Getting preapproved for a credit card with bad credit
Credit card preapprovals typically involve soft credit checks — not hard pulls — which means there isn’t any triggering alert to a credit bureau that can make your bad credit even worse. The process involves handing over some basic details, such as your name, birthday, monthly housing costs and annual income.
For example, Discover and Capital One both offer preapprovals for their credit cards, which can be a helpful way to see how you look in the eyes of a lender without impacting your credit. The preapproval process isn’t an official application, but it will give you an idea of which cards you might qualify for based on your unique situation.
When to use a credit card for bad credit
You may be tempted to use your credit card for all purchases, especially if it earns rewards. This only makes sense if you don’t carry a balance and incur interest charges, so only spend what you can afford to pay off in full. In short, treat your credit card like a debit card.
If your card offers purchase or travel protections, it makes sense to use it for big-ticket items, airfare or prepaid travel expenses.
Alternatives to credit cards to raise your credit score
If you’re looking to rehabilitate a bad credit score, getting your own credit card isn’t your only option. You can also explore options including:
- Becoming an authorized user: You can ask a friend or family member to add you to a credit card account as an authorized user, which may help boost your credit. Keep in mind that your credit is now linked to the primary account holder’s credit history with that account.
- Taking out a credit builder loan: With this type of borrowing, you don’t actually receive the cash upfront. Instead, the lender keeps the amount in a savings account, and you make regular installment payments that help increase your credit score. At the end of the term, you’ll receive the money.
Methodology
Our money and data analytics teams evaluated over four dozen unsecured and secured credit cards available to consumers with bad credit (a VantageScore of 600 or less). From there, we narrowed down our list of the best credit cards for bad credit by giving them a star rating out of five, based on the following factors:
Sign-up bonus and rewards (40%)
Most rewards credit cards are geared toward folks with good or excellent credit. However, there are a few credit cards for bad credit that do earn rewards — and a handful even offer a welcome bonus. These cards got a significant boost in our rankings.
Variable APR (25%)
Credit cards for bad credit with higher interest rates were scored lower than cards with more reasonable APRs.
Pricing and fees (20%)
Cards with no annual fee, no foreign transaction fees and low or no balance transfer fees scored higher in this category and received priority over cards that have higher costs to carry and use.
Benefits (15%)
While credit cards for bad credit typically don’t offer flashy perks or statement credits, there are a small number that do. These cards got a higher score in this category than others.
What didn’t make the cut
You may see these entries on some other lists for the best bad credit cards. However, there are some reasons why they may not be the best pick for your wallet.
- First Progress Platinum Prestige Mastercard? Secured Credit Card * The information for the First Progress Platinum Prestige Mastercard? Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. : This card boasts a lower APR than much of its competition, but there is a $49 annual fee. Plus, there is not an option to upgrade the card. You get the option to apply for a second credit card after six months, which may mean more annual fees.
- Chase Freedom Rise? * The information for the Chase Freedom Rise? has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. : While the Freedom Rise offers 1.5% cash back, Chase advertises that opening a Chase checking account with at least $250 increases your odds of approval. Since Chase checking accounts mostly have monthly fees, this may wind up costing you money if you cannot meet the requirements to get your service fee waived.
- Petal® 2 “Cash Back, No Fees” Visa® Credit Card * The information for the Petal® 2 “Cash Back, No Fees” Visa® Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. : The Petal 2 promotes a cash back range of 1%, 1.25% or 1.5%, but cardholders won’t be able to take advantage of that 1.5% tier until making 12 on-time payments. That means you’re stuck earning less than that for a full year.
- Capital One Quicksilver Secured Cash Rewards Credit Card: The Quicksilver Secured Cash Rewards card’s 1.5% cash back rate across all eligible purchases is good, but some other credit cards for bad credit pay higher rates for certain spending categories. Still, this card might be a good idea if you don’t qualify for an unsecured card from Capital One.
Frequently asked questions (FAQs)
Improving your credit score takes time, and a notable improvement to your credit scores generally requires a steady pattern of on-time payments.
There are some rewards options available if you have bad credit. For example, the Discover it? Secured Credit Card * The information for the Discover it? Secured Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. pays 2% cash back on up to $1,000 of combined quarterly purchases at gas stations and restaurants (then 1%) and 1% cash back on all other purchases. However, if you’re using a credit card for bad credit, rewards shouldn’t be your top priority. Instead, you should focus on paying your balance in full each month and boosting your credit score.
Yes, you can eventually upgrade to a better credit card once your credit score improves. After making regular on-time payments, you may be able to upgrade your secured card to an unsecured card with the same issuer. With a higher credit score, you may also be in the running for entry-level cash back credit cards. One piece of advice: Don’t close your other credit card. It’s smart to keep it open to demonstrate a longer credit history.
A late payment on any credit card can lead to serious consequences. In the short term, you’ll pay a late payment fee, and in the long term, your credit score will drop. Your payment history accounts for 35% of your FICO score, which means that failing to make an on-time payment can make your bad credit even worse.
Some credit cards for bad credit will allow cash advances, but it’s a bad idea. Be prepared for an even higher APR, plus a transaction fee that might cost as much as 5% of the advance amount.?
All information about Bank of America? Customized Cash Rewards Secured Credit Card, Chase Freedom Rise?, Discover it? Secured Credit Card, First Progress Platinum Prestige Mastercard? Secured Credit Card, Petal® 2 “Cash Back, No Fees” Visa® Credit Card, U.S. Bank Altitude? Go Secured Visa? Card and U.S. Bank Cash+? Secured Visa? Card has been collected independently by CNN Underscored.
Editorial Disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airlines, hotel chain, or other commercial entity and have not been reviewed, approved or otherwise endorsed by any of such entities.
This content is for educational purposes only and is not intended and should not be understood to constitute financial, investment, insurance or legal advice. All individuals are encouraged to seek advice from a qualified financial professional before making any financial, insurance or investment decisions.
Note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed or may no longer be available.
