Home » Top Picks » Best Credit Cards for Bad Credit for August 2020

Best Credit Cards for Bad Credit for August 2020

Best Credit Cards for Bad Credit for August 2020

*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated Jul 31, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

If you have bad credit, which is a credit score that’s less than 580, there are credit cards designed specifically to help rebuild your credit.

However, most of the best cards for bad credit are secured cards, which require you to put down a security deposit as collateral for your card’s credit line. That deposit is refundable when you pay the card off in full and close it, so once your credit score has improved, you can get your money back.

Based on our research of cards available through CompareCards, as well as top cards offered by major issuers, we selected some of the best secured cards and one unsecured card for bad credit, and categorized them according to different requirements.

Best credit cards for bad credit:

Best overall credit card for bad credit: Discover it® Secured

  • 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically

  • Credit line will equal your security deposit of $200 or more*

  • No annual fee, no late fee on your first late payment. No penalty APR*

Highlights
  • No Annual Fee, earn cash back, and build your credit with responsible use.
  • It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
  • Establish your credit line by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
  • See Rates & Fees

See additional details for Discover it® Secured

More Info

Why we like this card: The Discover it® Secured is designed for applicants with limited/bad/poor credit. It requires at least a $200 minimum deposit (and up to $2,500) and charges a $0 annual fee. What makes this card stand above the rest is that cardholders can earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically. Plus, for new cardmembers, Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.

It’s also a great card in that you can transition from a secured card to an unsecured card after demonstrating good behavior. Discover starts monthly reviews of your account after eight months of having the card to see whether you’re eligible to make the switch. If you’re eligible, you’ll get your deposit refunded and graduate to a Discover it® chrome. Note that you’re not guaranteed an upgrade, and Discover considers your history across all your credit products.

Finally, the Discover it® Secured has no late fee for the first late payment and no penalty APR. However, you should always pay on time as late payments are reported to the credit bureaus and negatively impact your credit score.

What to watch out for: The Discover it® Secured doesn’t have any major drawbacks. The interest rate is on the high side at 22.99% variable APR, but that’s pretty standard for cards designed for those with limited/bad/poor credit looking to build a better credit score. As long as you pay your bill in full each month, you can avoid interest charges.

Additional card info:

  • No overlimit fees
  • Foreign transaction fee: None
  • Free FICO Score
  • Reports to all three credit bureaus (Equifax, Experian and TransUnion)

Read our review of the Discover it® Secured.

Best for bad credit with no deposit: AvantCard Credit Card

  • Fast and easy application process

  • No deposit required and no penalty APR

  • 25.99% Variable

Highlights
  • Fast and easy application process
  • No deposit required
  • No hidden fees
  • No penalty APR
  • Report to all three major credit bureaus
  • Zero fraud liability for unauthorized charges
  • Avant branded credit products are issued by WebBank, member FDIC
  • Disclosure: If you are charged interest, the charge will be no less than $1.00

See additional details for AvantCard Credit Card

More Info

Why we like this card: Many unsecured credit cards for bad credit are subprime cards, laden with numerous fees that can take cardholders by surprise. But the AvantCard Credit Card is a straightforward card aimed at allowing applicants with fair/limited/bad/poor credit to build credit. It charges an annual fee of $39 and doesn’t require a deposit. Plus, you can check to see if you’re eligible to apply without impacting your credit score. Your credit limit will range from $300 to $1,000, depending on your application review.

What to watch out for: While the AvantCard Credit Card charges a low annual fee, in return, you don’t have to submit a deposit. The only big drawback is that the card is not available to residents of Colorado, Iowa, Vermont, West Virginia or Wisconsin.

Additional card info:

  • Foreign transaction fee: None
  • Regular purchase APR: 25.99% variable
  • Reports card account activity to the credit bureaus

Read our review of the AvantCard Credit Card.

Best for bad credit with a low deposit: Capital One® Secured Mastercard®

Why we like this card: If you’d like the opportunity to submit a lower deposit, you can take your chances with the Capital One® Secured Mastercard®. Once you apply, Capital One will set your minimum deposit at either $49, $99 or $200. Regardless of the deposit you’ll be required to make, you’ll be issued starting credit limit of $200.

What to watch out for: The Capital One® Secured Mastercard® has no major pitfalls other than a high APR of 26.99% (variable), but that is in line with other cards for limited/bad/poor credit. You can avoid paying interest charges if you stick to a budget and make sure to pay off the card in full every month.

Additional card info:

  • Annual fee: $0
  • Get access to a higher credit line after five on-time monthly payments
  • Foreign transaction fee: None

Read our review of the Capital One® Secured Mastercard®.

Best for bad credit with no credit check: OpenSky® Secured Visa® Credit Card

  • 17.39% (variable)

  • Build credit quickly. OpenSky reports to all 3 major credit bureaus.

  • $200 - $3,000 Credit Line*

Highlights
  • No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
  • The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
  • Build credit quickly. OpenSky reports to all 3 major credit bureaus.
  • 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
  • We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
  • *View our Cardholder Agreement located at the bottom of the application page for details of the card

See additional details for OpenSky® Secured Visa® Credit Card

More Info

Why we like this card: If you’re worried about your credit score taking a hit when applying for a new credit card when you already have bad credit, the OpenSky® Secured Visa® Credit Card could give you a way around that. It’s aimed at applicants with limited/bad/poor credit and doesn’t require a credit check, though you will have to provide financial information, such as income and monthly housing payment.

What to watch out for: The OpenSky® Secured Visa® Credit Card comes with a $35 annual fee. It’s a reasonable amount, but there are cards available to help with rebuilding credit that charge no annual fee. However, if you want a card with no credit check, the annual fee may be worth it.

Also, be aware that the annual fee reduces the amount of your available credit until it’s paid off. For example, if you have a $200 credit limit, the fee will reduce your available credit to $165.

Additional card info:

  • Reports to all three credit bureaus every month
  • Foreign transaction fee: 3% of each Transaction in U.S. dollars.
  • Regular purchase APR: 17.39% (variable)

Read our review of the OpenSky® Secured Visa® Credit Card.

Best for bad credit with low interest: DCU Visa® Platinum Secured Credit Card

Why we like this card: Many secured credit cards have high interest rates, but not the DCU Visa® Platinum Secured Credit Card. Its regular purchase APR is 11.50%- 18.00% variable, which is one of the lowest we’ve found for a secured card. Though we recommend paying your card off in full every month to avoid interest charges, sometimes that might not be possible. For times when you have to carry a balance, a card with a low interest rate can help you save money.

What to watch out for: You’ll have to join Digital Federal Credit Union to get this card, and you must have a savings account with DCU, too (which requires at least $5 to open). Also, the minimum security deposit of $500 for this card is rather high. Many secured cards have a $200 minimum deposit.

Additional card info:

  • Reports to all three credit bureaus
  • Works with Apple Pay, Google Pay and Samsung Pay
  • Annual fee: $0
  • Foreign transaction fee: None

FAQs for people with bad credit

What is a bad credit score? The most commonly used scoring method for credit scores is the FICO Score, which ranges from 300 to 850. A score that’s less than 580 is considered poor.

Can I get a credit card with bad credit? It is possible to get a credit card when you have a poor credit score. However, many credit cards designed for applicants with poor credit will have bad terms — expensive fees and high interest rates. We recommend looking at secured credit cards, which require you to put down a security deposit (often around $200) before you get the card. While secured cards require you to come up with money for the deposit upfront, the deposit is usually refundable if you pay off your card and close the account. And some secured cards will eventually let you upgrade and refund your deposit.

How do I apply for a credit card with bad credit? You’ll need to provide the same information you would provide on any credit card application — your name, address, Social Security number, income, etc. Some issuers may allow you to check if you’re prequalified before you apply. Prequalification doesn’t guarantee approval, but it does mean you have a better chance at approval. And it’s a soft pull, which doesn’t ding your credit score. (Be aware that once you actually apply, there will still be a hard pull on your credit history.)

What are some easy credit cards to get? No credit card is guaranteed. However, the recommended five cards in this guide can help people with bad credit rebuild their credit. Most are secured cards, which require a deposit, and one is an unsecured card with an annual fee. Other cards that may be easier to qualify for are store cards, which often come with high APRs and low credit limits, but if used responsibly, can help build your credit score.

How can I build credit without a credit card? Credit cards are a useful tool that can help you rebuild from bad credit. However, if you don’t want a credit card — or can’t get a credit card — another option to consider is a credit builder loan. You may be able to apply for a credit builder loan from credit unions, smaller banks and online lenders. Though it’s called a “loan,” you don’t get money upfront. You’ll make payments of a set amount over a certain period of time, and when you’ve paid in full you’ll get your money back (minus any fees the financial institution charges). Your payment history gets reported to the credit bureaus, which helps you build credit.

How to repair your credit

Check your credit score and your credit reports

You have numerous options for checking your credit score for free. And checking your credit score doesn’t hurt it. Ways to get your credit score include LendingTree, the Discover Credit Scorecard and signing up directly with the credit bureau Experian. When it comes to your credit report, you’re entitled to a copy of your report every year at no cost from each of the three bureaus — Equifax, Experian and TransUnion. You can get it from AnnualCreditReport.com.

Get a credit card and use it responsibly

Used wisely, a credit card is a tool that can help you rebuild your credit. Here are some practices you should follow to build a good credit score and avoid piling up debt:

  • Pay your credit card bill on time and in full. Paying on time is the most important thing you can do for a good credit score, and paying in full helps you avoid interest charges and prevent racking up debt by allowing your balance to creep up.
  • Keep your credit utilization low. A good rule is not to use more than 30% of your available credit. For example, with a $500 credit limit, don’t use more than $150 of it.
  • Don’t apply for too much new credit. Hard inquiries temporarily hurt your credit score, and multiple inquiries in a short timespan can cause issuers to reject your application.

Avoid predatory credit products and scams

You’ve likely come across subprime credit credit cards in your search for credit cards for bad credit. That’s especially true if you’re looking for a credit card for bad credit with no deposit. Examples include cards from Credit One, First Premier, Horizon Card Services and Total Visa. The credit cards offered by these companies have numerous fees, which may include:

  • A monthly service fee
  • An account validation fee
  • An authorized user fee
  • An express payment fee

In addition to expensive fees, cards such as these may not be clearly disclosed before you apply. For example, Credit One’s website lists multiple cards on its website as meant for applicants who are rebuilding credit. The annual fee for these cards can range from $0 to $99 — and you won’t know what fee to expect until after you submit a prequalification request.

Even though it may be tempting to go with a card like one of these should you want an unsecured card for bad credit, we recommend against it. If you need an unsecured card and you’re willing to pay an annual fee, consider the AvantCard Credit Card. And if you can put together $200 for a deposit, consider a secured card like the Discover it® Secured.

Finally, don’t believe anyone who says they can fix your credit quickly. Rebuilding credit takes time. Anyone who promises a quick fix is likely trying to take advantage of you.


Recommended Posts:

Read More

Best HSBC Credit Cards

HSBC is a global financial institution that serves more than 40 million customers in 64 countries and territories. In addition to checking, savings, mortgage, investing and insurance products, HSBC offers a variety of credit card products, including cashback, dining and travel rewards cards. We highlight the pros and cons of several HSBC credit cards to […]

Read More

Read More

Best Business Rewards Cards

For small business owners looking for the best business credit card offers, there’s a lot to choose from. Depending on how and where your business spends will help narrow down your choices. To help you boil down to the best card for your business, we selected cards listed on our site with reasonable annual fees, […]

Read More