If your credit score has taken a nosedive, you’ll need to start using credit responsibly to rebuild it. This can get tricky, however, since many forms of credit require good credit to qualify to use them. That’s where credit cards for bad credit come in; these credit cards are easier to qualify for and report credit behavior to credit bureaus, which can help build credit back up.
“Before someone with a low credit score opens a new credit card, he or she should consider [several] factors to determine if it is a smart financial decision or not,” said Ken Chaplin, a senior vice president for TransUnion, one of the three major credit bureaus that track U.S. consumers’ credit histories. Some of the factors you’ll want to consider before applying for a credit card include your history of on-time payments, your financial stability and the credit card’s features.
Comparing different credit cards for bad credit is also an important step. The best credit cards for bad credit are easy to qualify for, have lower APRs and low fees, report credit usage to the three major credit bureaus, offer credit card rewards or provide tools that help consumers track and rebuild their credit.
This list of the 10 best credit cards for bad credit will help you quickly find an option to fit your needs and financial habits.
1. Capital One Secured MasterCard
- Credit limit up to $3,000
- No annual fee
- Free access to credit-tracking tools
Steven Hughes, a financial mentor and founder of financial literacy advocacy organization Know Money, Inc., named the Capital One Secured card as a top credit card for bad credit. “While the interest rate is high on this secured card (24.99%, barring you don’t have a late payment), there’s no annual fee and no foreign transaction fees, [which] help you save some money when travelling,” Hughes said.
The card also offers free access to Capital One Credit Tracker, which provides real-time free access to your credit score as well as tools to help you simulate and compare how different actions would affect your credit score. Capital One also reports to all three major credit bureaus — TransUnion, Experian and Equifax.
2. Discover it Secured Credit Card
- Credit limit up to $2,500
- Cash-back rewards are doubled after first year of use
- Free FICO credit score reported on each monthly statement
Cardholders have the chance to earn cashback rewards with a Discover it Secured card — 1 percent back on all purchases and 2 percent back at restaurants and gas stations (up to $1,000 a quarter). For new Discover it account holders, all cash back earned in the first 12 billing cycles is doubled and applied to the account.
Lastly, the Discover it Secured Credit Card offers customers the chance to transition from a secured card to an unsecured card and have their deposit returned after one year of responsible credit management.
3. Navy Federal Credit Union nRewards Secured Credit Card
- APR as low as 9.24%
- No annual fee, balance transfer fee or foreign transaction fee
- Earn reward points
The nRewards Secured card requires a higher security deposit of $500 to open, but comes with few fees and low APRs that start at just 9.24% and only reach as high as 18.00%.
“Also rare is that you can earn rewards (one per $1 spent on purchases with no limit on points earned), which is not the case with most secured cards,” Freeman said. Rewards points are valid for up to four years with no limits on points earned, and cardholders can redeem points for rewards like gift cards to popular restaurants, department stores or even a cash card.
4. U.S. Bank LANPASS Visa Secured Card
- Credit limit up to $5,000
- Earn miles, with 5,000-mile bonus for first use
- No annual fee for the first year
To open a LANPASS Visa Secured Card, the account opener must make a security deposit of at least $300 and up to $5,000 for a larger credit limit. This card has a 23.24% APR and no annual fee for the first year, after which the fee is $25.
5. USAA Secured Card American Express or Visa Platinum Card
- Earn interest on your security deposit
- No penalty APRs
- Low APRs of 10.15% to 20.15%
Opening either card requires a minimum security deposit of just $250, with the option to deposit more to increase the credit limit up to $5,000. A unique perk of the USAA Secured Cards from American Express and Visa, however, is that rather than hold your deposit in any old account, USAA puts it in one of its two-year certificates of deposit where it will earn interest for the cardholder.
These cards also offer low rates, from 10.15% to 20.15% APR and has no foreign transaction fees. They also have an annual fee of $35.
6. Milestone Gold MasterCard
- Instant pre-qualification with no impact to credit score
- Credit score monitoring through a partner
- No security deposit required
But the Milestone Gold MasterCard offers a pre-qualification process that won’t incur a hard credit pull, “which is great because it won’t further dent credit, and you may qualify even if you’ve had a prior bankruptcy,” said Priyanka Prakash, a financial specialist for business loan search site FitBiz Loans.
As an unsecured, subprime credit card, the Milestone Gold MasterCard requires no security deposit to open an account, which will have a $300 credit limit. The Milestone Gold MasterCard also provides cardholders with all benefits of a Gold MasterCard, which includes identity theft resolution, extended warranty coverage and price protection on purchases.
The card has an annual fee of $35 to $59, depending on creditworthiness, and a 23.90% APR.
7. Merrick Bank Secured Visa Card
- Open with $200 security deposit
- Low 17.70% APR
- FICO score reported monthly on card statements
Cardholders also have access to monthly reporting of their FICO credit score through Merrick Bank’s online credit card account management. These regular updates are useful to monitor progress in building credit and to alert the cardholder to potential credit issues.
The Merrick Bank Secured Visa card carries a lower 17.70% APR, which is especially competitive for those with poor credit. It charges a $36 annual fee for the first year, after which the fee is charged at $3 a month.
8. Unity Visa Secured Credit Card
- Lower fixed APR at 17.99%
- $250 security deposit
- Credit limit up to $10,000
A new account holder can secure a Unity Visa Secured card with as little as $250, and can provide a deposit of up to $10,000 to secure a credit limit of the same amount.
The Unity Visa Secured credit card also provides a complimentary “How to Rebuild Credit Program” that walks new cardholders through the concepts of good credit management and what they’ll need to do to effectively build their credit.
9. Credit One Unsecured Platinum Visa Card
- Pre-qualification that won’t affect credit
- Free online monthly credit score tracking
- Payment options and protections
For those with low credit scores, the Credit One Unsecured Platinum Visa might carry a higher annual fee. “But the upside is that you can earn 1 percent cash back on groceries and gas, which is hard to come by in a card for people with bad credit,” Prakash said.
Cardholders can sign into their online account to view monthly tracking of their credit score. They also have the option to pick a new due date by which their payments must be made within six days before or after the original date.
The Credit One Unsecured Platinum Visa also offers a credit protection program, which will cancel payments due to the card for up to six months if the cardholder becomes involuntarily unemployed or disabled.
10. DCU Visa Platinum Secured Credit Card
- Low APR of 11.75%
- Apple Pay compatibility
- No annual fee
This credit card does not require a deposit, but is instead tied to the balance of the cardholder’s DCU savings account. The DCU Visa Platinum Secured Credit Card then has a credit limit equal to the savings account balance, which the cardholder borrows against.
The DCU Visa Platinum Secured Credit Card also offers all of the convenience of a Visa card, including compatibility with Apple Pay. It also gets the cardholder access to benefits like free auto rental collision damage waiver, Visa travel insurance coverage and travel services, and extended warranties on many purchases.
Some banks and credit unions mentioned might be clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions.
This article, 10 Best Credit Cards for Bad Credit, originally appeared on GOBankingRates.com.
Follow GOBankingRates on Twitter: www.twitter.com/GOBankingRates