Yes, you can get a credit card even if you've been rejected for all other credit cards. But there's a catch.
Having poor credit can seem like a trap. In order to rebuild your credit, you need to get a new line of credit. Of course, no one is willing to extend you credit when you have poor credit. The same conundrum also exists for those with a limited credit history, either because they’re young or just moved to the United States.
The best credit cards for bad credit are a product called a secured card. They require a deposit, which becomes the basis of your credit limit. Then these cards can make purchases just like any other credit card. As you make your payments on time, positive reports are sent to the major credit bureaus. With a year or two of timely payments, you’ll see your credit score improve to the point where you’ll qualify for standard, unsecured cards.
Unfortunately, some secured cards are loaded with fees and other unfavorable terms. To find a good one, look for one with a reasonable annual fee – and not monthly fee. There should be a standard grace period, during which you can pay your balance in full to avoid interest charges. Other nice features can include rental car insurance and even some rewards.
To get started rebuilding your credit, here are the best secured cards right now…
The perks: You place a refundable security deposit of $49, $99, or $200 depending on your creditworthiness. But you receive a credit line between $200 and $3,000. You can pay your balances in full to avoid interest charges or pay a standard interest rate of 22.9 percent.
Annual fee: $29, but like all Capital One cards, there are no foreign transaction fees imposed on charges processed outside of the United States.
Bottom line: A reasonable annual fee and standard interest rate make this an attractive card from a well-known issuer.
The perks: Receive a credit line of $300 to $4,900, based on your ability to pay and the amount of your security deposit. After a year, you may qualify to have the security deposit returned – while you continue to use the card. There’s a standard interest rate of 20.24 percent.
Annual fee: $39
Bottom line: This card is designed to help you quickly transition from a secured card to a standard credit card in a year.
The perks: Retail banking giant US Bank offers this secured card with many of the benefits of a standard credit card. For example, you receive access to a travel and emergency assistance hotline and are covered by auto rental collision damage waiver and travel accident insurance policies. You also have access to free Internet banking services, including an automatic bill pay system. The standard interest rate is 20.99 percent.
Annual fee: $35
Bottom line: A great card for those who travel, since it solves many of the problems travelers face when trying to use cash, checks, or debit cards.
The perks: One of the rare secured cards that offers rewards. You receive one mile in AeroMexico’s Club Premier program for each dollar spent and double miles for gas and groceries. New cardholders earn 5,000 bonus miles and a complimentary companion ticket when they make their first purchase. Other benefits include a 10 percent discount on AeroMexico airfare purchases and a $99 companion ticket each year with renewal.
Like the standard US Bank Secured Visa Card, you receive access to a travel and emergency assistance hotline and are covered by auto rental collision damage waiver and travel accident insurance policies.
Annual fee: Free for the first year, $25 fee each following year.
Bottom line: Even if you never use the travel benefits, this card offers a lot of features and no annual fee.
The perks: Pay an annual fee plus a security deposit that becomes your credit limit. This card has a 19.99 percent APR and reports to all of the major credit bureaus, and no credit check required.
Annual fee: $29
Bottom line: This basic card has a low annual fee, even lower percentage rate, and is perfect for those who want no credit check for approval.
Every Wednesday, Debt.com researches the nation’s best credit card offers and shares the results in plain English. Unlike other sites, we don’t get paid to recommend any card. Please note that perks and fees can change on a moment’s notice and without warning. Got a credit card question? Email email@example.com.