- Consider a secured card to build good credit habits and improve your credit.
- A high APR and fees may be the price to pay to re-establish your credit.
- Even those with bad credit can potentially get a credit card with rewards.
If your credit score is low, you already know financial goals are harder to attain if you can’t get a loan or credit card with good terms. But the good news is that a poor credit score doesn’t have to be a permanent condition. Along with other long-term strategies like constructing a budget to pay down any outstanding debt, you might consider rebuilding your positive credit history with a new credit card.
While you do need good credit to get the best credit card terms, there are credit cards for people with low credit scores because of a rocky credit or limited credit history.
We’ve found four credit cards that offer consumers with low credit scores an opportunity to start raising their scores. Because they target a higher-risk audience, you won’t enjoy all of the freedom or low rates that people with higher credit scores can get. But these cards, listed in no particular order, are a means to an end: a possible improvement for your credit score.
Capital One Secured MasterCard
For some people, a secured card can bring the easiest access to new credit. The Capital One Secured MasterCard requires a refundable cash deposit to get the card once you’re approved. With Capitol One’s card, the deposit amounts range from $49, to $99, to $200 – based on your credit score. The upside is that your deposit doesn’t necessarily limit your credit limit, as it does with many secured cards. In addition, this card may allow you to increase your credit limit without an additional deposit. And, because the issuer is a major bank, you might eventually get a Capitol One unsecured card once your credit history improves.
The interest rate (APR) is high at 24.99 percent, but there is no annual fee, and you can pay your initial deposit over an 80-day period.
For more information on the Capital One Secured MasterCard and how to apply go here.
USAA Secured Card (American Express or Visa Platinum)
We’ve highlighted this secured credit card because it highlights a segment of the population – those who have served in the military and their families -- who often don’t know there are financial services created for them. This card requires a minimum security deposit of $250, with the option to raise your credit limit to $5,000 with an additional deposit. A unique benefit of the USAA card is that your deposit is placed into a two-year certificate of deposit, which earns interest. There is an annual fee of $35, but the card offers rates as low as 10.15 percent and has no foreign transaction fees in case you use your card abroad.
For current military personnel, you can get 4 percent APR for up to 12 months during a deployment or active relocation.
For more information on the USAA Secured American Express Card and how to apply go here.
Credit One Bank Unsecured Visa
Here’s a good option when an unsecured card makes sense. The application involves a pre-qualification process that lets applicants see if they meet the card’s requirements without registering a “hard pull” that could hurt your credit score. The annual fee is on the high end – as much as $99 – but the benefit is that you can earn 1 percent cash back on purchases of gas or groceries, a rare benefit for unsecured cards for low credit score customers. The APR ranges from 15.65 percent to 24.15 percent. This card also enrolls you in a credit protection program that cancels payments due on the balance for up to six months if you become involuntarily unemployed or disabled.
Another plus: after making several payments on time, you might be able to get an increase of your credit line.
For more information on the Credit One Bank Unsecured Visa and how to apply go here.
Milestone Gold MasterCard
Like the Credit One Bank Unsecured Platinum Visa card above, this unsecured card also offers an initial pre-qualification application that won’t affect your credit score. Even a past bankruptcy isn’t necessarily a deal-breaker, assuming that you now responsibly use your credit. There is no security deposit required, but the credit limit, at $300, is small. Still, it can be a good option for those with extremely poor credit ratings. And you’ll get typical Gold MasterCard benefits like identity theft resolution, extended warranty coverage and price protection on purchases.
Depending on your creditworthiness, the annual fee ranges from $35 to $59. The APR is 23.90%.
For more information on the Milestone Gold MasterCard and how to apply go here.
Keep in mind, not all of these cards may be perfect for you, but they can offer you a chance to start building your credit score back up again. In many cases, limited credit is better than having none at all.
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