A secured credit card may be your best bet if you’re new to credit or have made some major credit mistakes in the past.
Lenders who are cautious about extending credit to borrowers who have had financial difficulties may be more willing to approve applications for a secured credit card, including a deposit that can be confiscated if the debt is not paid on time.
As a result, the lender sees the borrower as a lower risk. Each secured card is unique and has its minimum and maximum credit limits, which often range from a few hundred dollars to several thousand dollars, depending on the card’s maximum limit and how much of a deposit you’re willing and able to put down.
How to Get Approved for Credit Cards With Bad Credit
There is no way to guarantee that you will be approved for a credit card. However, you may increase your chances of success by understanding your financial situation and applying for a tailored card to people in your case.
If a credit card issuer offers prequalification for one or more of their cards, it will usually be listed on their website. You’ll be asked to provide some personal information, such as your name, address, and the last four digits of your Social Security number, to check if you qualify.
This is so that the issuer may perform a mild credit check on you. Unlike a “hard” credit check, this form of credit check does not affect your credit score.
Running a soft check isn’t the same as starting the application process, but it does provide an issuer an indication of what you might or might not be eligible for among the cards they offer.
Petal® 1 “No Annual Fee” Visa® Credit Card
This card is ideal for credit builders who want to earn cash rewards and don’t want to pay an annual fee.
But, for those who want to earn cashback regularly, the Petal Perks program is only available on rare occasions and only applicable at certain retailers.
Details about Card
- $0 Annual Fee
- Regular APR: 19.99% – 29.49% (Variable)
- Credit limits range from $300 to $5,000.
- Increase your credit limit in as short as six months. The following terms and conditions apply.
- What if you have no credit history? It’s no problem. Instead, if you’re eligible, we’ll calculate your Cash Score.
- Cash return ranging from 2% to 10% at chosen shops
- The variable annual percentage rate (APR) ranges from 19.99 percent to 29.49 percent.
- Without affecting your credit score, see if you’re pre-approved in minutes.
- There are no yearly or international transaction fees.
- Hundreds of thousands of Petal Card members can help you build credit.
- Petal’s mobile app makes managing your money, tracking your spending, and automating payments simple.
- Petal sends credit reports to all three major credit bureaus.
- There are no deposits necessary.
- WebBank, an FDIC-insured financial institution, issued the card.
Discover it® Secured Credit Card
The Discover it® Secured Credit Card offers a wonderful combination of advantages for individuals wishing to improve their credit. There are no annual fees or account opening fees with this card, and it also earns points.
Details about Card
- There is no annual fee, and you can receive cashback to improve your credit by using it responsibly.
- Using your secured credit card contributes to establishing a credit history with the three major credit bureaus. Prepaid and debit cards, in general, are unable to do so.
- By presenting a refundable security deposit of at least $200 with your tax return, you can establish your credit line. When submitting your deposit, you must provide your bank details.
- Automatic reviews begin at 7 months to determine if we can convert you to an unsecured line of credit and refund your deposit.
- Earn 2% cashback on up to $1,000 in combined purchases at gas stations and restaurants each quarter. Plus, automatically get an unlimited 1% cashback on all other purchases.
OpenSky® Secured Visa® Credit Card
If you want to develop credit using a card with low credit or no credit history, you should check into secured credit cards. Although the OpenSky Secured Visa boasts that 99 percent of its users with no credit earned a credit score after six months of using the card, it isn’t the most affordable alternative.
In fact, it only has an advantage over rival cards that offer automatic credit line upgrade reviews, cashback, and more because of its low ongoing APR of 17.39 percent (variable).
- Variable 17.39 percent APR is less than that of the competition.
- The credit limit is high at first, up to $3,000 (by matching with a deposit)
- There is no requirement for a credit check.
Is it Worth it?
The OpenSky Credit Card is a good choice for someone who needs to establish credit or repair bad or damaged credit and desires a low APR and a higher initial credit limit than usual.
If you’re concerned that you’ll need to rotate a balance on your secured card on a regular basis, having the lowest APR feasible is a good choice.
You’ll also get a more extensive initial credit limit than several other secured cards (assuming you can put down a large deposit), and no credit check is necessary.
However, if you require a credit card after bankruptcy, its simple application with no credit check can make all the difference.
How to pick the right credit card for bad credit?
Obtaining a credit card tailored for people with bad credit is a great way to improve your credit score, but it’s critical to select the correct credit card if you want the card to work for you. When looking for a credit card with bad credit, keep the following points in mind:
Know the fees:
Some cards for those with bad credit have hefty annual fees, as well as a slew of extra charges. Look for a card that tries to keep your out-of-pocket expenses to a minimum.
Get started with your reporting:
At least one of the three major credit bureaus will receive information from the best cards for bad credit. To improve your credit score, you’ll need to make consistent payments over time.
After a certain length of time, many of the best credit cards for bad credit will allow you to upgrade to an unsecured credit card, presuming you have a decent payment history.
This is advantageous to cardholders since it eliminates the need to close a credit line and start a new account after your credit has improved, which can harm your credit score.
Frequently Ask Questions (FAQs)
What is a Secured Credit Card?
A secured credit card is one that has a security deposit attached to it. You will put money into a bank account prior to approval, and you will not be able to access it while you have the card. The amount of your deposit will be the credit limit on your secured card.
What is the purpose of a secured card?
A secured credit card functions similarly to a regular credit card, with the exception that your credit limit is set by the amount of money you place in a deposit account to guarantee the credit line.
Which financial institutions provide a secured credit card?
Secured credit cards are available from a number of banks. Some of the banks are smaller, but Discover, Bank of America, and U.S. Bank are among the larger banks that offer secured credit cards.
Do secured credit cards assist in the development of credit?
Yes. Payment records for secured credit cards will be reported to at least one of the main credit sections. This means that while a solid payment history can help you establish credit, missed payments or defaults will hurt your credit score. All three credit bureaus will receive information from the top secured credit cards.
How quickly can a secured card help you develop credit?
Secured cards submit payment information to credit bureaus on a monthly basis, but it is entirely up to the credit bureaus how they use it. In general, after making on-time payments for a certain or indeterminate period of months, several banks that offer secured credit cards will offer a “graduate” to an unsecured credit card.
Which secured credit card is the best?
The greatest secured credit card for you might not be the finest secured credit card for the majority of others. Consider the Discover It® Secured for a low cost of carrying, rewards, and the chance to build your credit.
What’s the difference between a secured credit card and an unsecured one?
The most significant distinction between secured and unsecured credit cards is that an unsecured credit card does not require a security deposit. The bank will determine your credit limit. A deposit is required for a secured credit card, and your credit line will be equivalent to the deposit.
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