The best credit cards for bad credit (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 help you earn rewards. Read on to learn more about credit cards for bad credit and how you can determine the best pick for your wallet.

Our picks at a glance

What is bad credit?

• 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 advertisem*nts, 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 bad credit credit cards, 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 is no rule set in stone that a lender must offer an upgrade option. That may sound a bit 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 bad credit credit card, 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:

1. 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.
2. 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.
3. 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 comfortable cash cushion.

It’s important to look into the future, too. Find out if the lender offers automatic reviews for credit limit extensions 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 product that offers rewards and bigger benefits.

Getting preapproved for a credit card with bad credit

Credit card preapprovals involve soft credit checks — not hard pulls — which means there isn’t any triggering alert to a credit reporting agency that can make your bad credit even worse. It’s a simple process that 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.

What are the alternatives to credit cards for bad credit?

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 and our editorial judgment:

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: 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*: 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 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 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.

All information about First Progress Platinum Prestige Mastercard® Secured Credit Card, Chase Freedom Rise, Petal® 2 “Cash Back, No Fees” Visa® Credit Card and Capital One Quicksilver Secured Cash Rewards Credit Card has been collected independently by CNN Underscored.

*The information for the following card(s) has been collected independently by CNN Underscored Money: Discover it® Secured Credit Card, Chase Freedom Rise, Capital One SavorOne Student Cash Rewards Credit Card, U.S. Bank Cash+® Secured Visa® Card, U.S. Bank Altitude® Go Secured Visa® Card, and Bank of America® Customized Cash Rewards Secured Credit Card. The card details on this page have not been reviewed or provided by the card issuer.