Meilleures cartes de crédit pour un pointage de crédit de 500

Un pointage de crédit d'environ 500 est considéré comme un crédit médiocre ou mauvais et il est peu probable qu'il soit admissible à la plupart des cartes de crédit traditionnelles (non garanties). Si vous vous trouvez dans cette tranche de pointage de crédit, vous pouvez toujours bénéficier d'une carte de crédit sécurisée, qui est un excellent outil pour reconstruire progressivement votre pointage de crédit.

La plupart des cartes de crédit disponibles pour les personnes ayant un faible crédit offrent des fonctionnalités très basiques, et certaines peuvent facturer un certain nombre de frais. Mais il existe quelques cartes de crédit avec des fonctionnalités conviviales pour les titulaires de carte qui se démarquent vraiment du lot.

Nous avons choisi quelques-unes des meilleures cartes de crédit si votre pointage de crédit est de l'ordre de 500. Les utiliser de manière responsable et cohérente vous aidera à reconstruire votre pointage de crédit endommagé et, un jour, à bénéficier d'offres de cartes de crédit plus lucratives conçues pour les consommateurs disposant d'un bon crédit.

⁺Les exigences de pointage de crédit sont basées sur les propres recherches de Money Under 30 sur les taux d'approbation ; atteindre le score minimum vous donnera les meilleures chances d'être approuvé pour la carte de crédit de votre choix. Si vous ne connaissez pas votre pointage de crédit, utilisez notre outil d'estimation de pointage de crédit gratuit pour avoir une meilleure idée des cartes auxquelles vous serez admissible.

Meilleures cartes de crédit pour mauvais crédit

• Meilleur pour la reconstruction du crédit : Carte de crédit Petal® 1 « sans frais annuels » Visa®
• Idéal pour un dépôt de garantie faible : Carte de crédit sécurisée Capital One Platinum
• Meilleur pour aucune vérification de solvabilité : Carte de crédit Visa® sécurisée OpenSky®
• Idéal pour les faillites récentes : Carte de crédit Indigo® Mastercard®
• Idéal pour les personnes sans crédit : Milestone Mastercard®

Carte de crédit Visa® Petal® 1 "sans frais annuels"

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La carte de crédit Visa® Petal® 1 « Sans frais annuels » est une excellente carte sans frais annuels avec un système de récompenses solide pour les personnes ayant un crédit limité ou nul. Il relève des trois principaux bureaux de cartes de crédit et vous pouvez obtenir une limite de crédit plus élevée entre 300 $ et 5 000 $ - assurez-vous simplement d'utiliser votre carte de manière responsable. La carte de crédit Visa® Petal® 1 « sans frais annuels » est émise par WebBank, membre FDIC.

Lire la critique Exigences en matière de pointage de crédit :les exigences en matière de pointage de crédit sont basées sur les propres recherches de Money Under 30 sur les taux d'approbation ; atteindre le score minimum vous donnera les meilleures chances d'être approuvé pour la carte de crédit de votre choix. Si vous ne connaissez pas votre pointage de crédit, utilisez notre outil d'estimation de pointage de crédit gratuit pour avoir une meilleure idée des cartes auxquelles vous serez admissible. * Money Under 30 utilise un score FICO 8, qui est l'un des nombreux types de scores de crédit. *Un créancier peut utiliser un score différent lorsqu'il décide de vous approuver ou non pour un crédit. Médiocre 500-599 Passable 600-699 Bon 700-749 Excellent 750-850

Ce que nous aimons :

• Aucun historique de crédit requis, ce qui le rend parfait pour les débutants.

• Pas de frais annuels, ni de dépassement de limite ni de frais de transaction à l'étranger.

• Remise en argent de 2 % à 10 % chez certains marchands.

• 0 $ de frais annuels
• Les TAP variables vont de 22,24 % à 31,74 %
• Limites de crédit de 300 $ à 5 000 $
• Obtenez une augmentation de votre limite de crédit en seulement 6 mois. Des conditions générales s'appliquent.
• Pas de pointage de crédit ? Aucun problème. Si éligible, nous créerons votre Cash Score à la place.
• 2 % - 10 % de remise en argent chez certains marchands
• Vérifiez si vous êtes pré-approuvé en quelques minutes sans impact sur votre pointage de crédit.
• Pas de frais de transaction annuels ou étrangers.
• Établissez un crédit aux côtés de centaines de milliers de titulaires de la carte Petal.
• L'application mobile de Petal facilite la gestion de votre argent, le suivi de vos dépenses et l'automatisation des paiements.
• Petal rapporte aux trois principaux bureaux de crédit
• Aucun dépôt requis
• Carte émise par WebBank, membre FDIC

Frais annuels 0 $ APR régulier 22,24 % - 31,74 % Intro variable APR Intro APR Achats N/A , Intro APR Transferts de solde N / A ,

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Carte de crédit sécurisée Capital One Platinum

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Si vous craignez de ne pas être approuvé pour une carte de crédit conventionnelle ou si vous avez été rejeté dans le passé, le Capital One Platinum Secured est une excellente option. Il est rare d'en trouver un qui ne facture pas de frais annuels et Capital One révisera automatiquement votre limite de crédit en aussi peu que six mois.

Lire la critique Exigences en matière de pointage de crédit :les exigences en matière de pointage de crédit sont basées sur les propres recherches de Money Under 30 sur les taux d'approbation ; atteindre le score minimum vous donnera les meilleures chances d'être approuvé pour la carte de crédit de votre choix. Si vous ne connaissez pas votre pointage de crédit, utilisez notre outil d'estimation de pointage de crédit gratuit pour avoir une meilleure idée des cartes auxquelles vous serez admissible. * Money Under 30 utilise un score FICO 8, qui est l'un des nombreux types de scores de crédit. *Un créancier peut utiliser un score différent lorsqu'il décide de vous approuver ou non pour un crédit. Médiocre 500-599 Passable 600-699 Bon 700-749 Excellent 750-850

Ce que nous aimons :

• Déposez un dépôt de garantie remboursable à partir de 49 $ pour obtenir une ligne de crédit initiale de 200 $.

• Soyez automatiquement considéré pour une ligne de crédit plus élevée en aussi peu que six mois sans dépôt supplémentaire nécessaire.

• Pas de frais annuels et pas de frais de transaction à l'étranger.

• Pas de frais annuels ou cachés. Vérifiez si vous êtes approuvé en quelques secondes
• Établir votre crédit ? L'utilisation responsable de la carte Capital One Platinum Secured pourrait aider
• Déposez un dépôt de garantie remboursable à partir de 49 USD pour obtenir une ligne de crédit initiale de 200 USD
• Vous pouvez récupérer votre dépôt de garantie sous forme de crédit sur votre relevé lorsque vous utilisez votre carte de manière responsable, par exemple en effectuant des paiements à temps
• Être automatiquement considéré pour une ligne de crédit plus élevée en aussi peu que 6 mois sans dépôt supplémentaire nécessaire
• Profitez d'une tranquillité d'esprit grâce à la responsabilité en cas de fraude à 0 USD, afin de ne pas être responsable des frais non autorisés
• Surveillez votre pointage de crédit avec CreditWise de Capital One. C'est gratuit pour tout le monde
• Accédez à votre compte 24 heures sur 24, 7 jours sur 7 avec les services bancaires en ligne pour accéder à votre compte depuis votre ordinateur de bureau ou votre smartphone, avec l'application mobile de Capital One

Frais annuels 0 $ APR régulier 26,99 % (Variable) Intro APR Intro APR Achats N/A , N/A Intro APR Transferts de solde N/A , N/A

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Carte de crédit sécurisée OpenSky® Visa®

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La carte de crédit OpenSky® Secured Visa® est une carte de crédit sécurisée qui ne nécessite pas de vérification de crédit pour s'appliquer. Que vous ayez un crédit médiocre ou pas de crédit du tout, OpenSky est une opportunité d'améliorer votre historique de crédit.

Lire la critique Exigences en matière de pointage de crédit :les exigences en matière de pointage de crédit sont basées sur les propres recherches de Money Under 30 sur les taux d'approbation ; atteindre le score minimum vous donnera les meilleures chances d'être approuvé pour la carte de crédit de votre choix. Si vous ne connaissez pas votre pointage de crédit, utilisez notre outil d'estimation de pointage de crédit gratuit pour avoir une meilleure idée des cartes auxquelles vous serez admissible. * Money Under 30 utilise un score FICO 8, qui est l'un des nombreux types de scores de crédit. *Un créancier peut utiliser un score différent lorsqu'il décide de vous approuver ou non pour un crédit. Médiocre 500-599 Passable 600-699 Bon 700-749 Excellent 750-850

Ce que nous aimons :

• Aucune vérification de solvabilité n'est nécessaire pour obtenir l'approbation de cette carte.

• Choisissez votre propre dépôt de garantie entre 200 $ et 3 000 $ et cela devient votre ligne de crédit.

• Vos paiements ponctuels seront signalés aux trois agences d'évaluation du crédit, afin que vous puissiez commencer à bâtir votre crédit de manière responsable.

• Les frais annuels ne sont que de 35 $ et OpenSky® ne facture aucun frais de demande, de service ou de traitement.

• Aucune vérification de solvabilité à appliquer et découvrez instantanément si vous êtes approuvé
• OpenSky donne à chacun la possibilité d'améliorer son crédit avec un taux d'approbation moyen de 85 % au cours des 5 dernières années
• Soyez pris en compte pour une augmentation de la ligne de crédit après 6 mois, sans dépôt supplémentaire requis
• Vous pourriez être éligible à la carte non sécurisée OpenSky Gold après seulement 6 mois
• Rapports mensuels aux trois principaux bureaux de crédit, contrairement à une carte prépayée ou de débit
• Consultez votre score FICO® via votre compte OpenSky, un moyen simple de rester au top de votre crédit
• Près de la moitié des titulaires de carte OpenSky qui effectuent des paiements à temps améliorent leur score FICO de plus de 30 points au cours des 3 premiers mois
• Votre dépôt remboursable*, aussi bas que 200 $, devient votre limite de crédit OpenSky Visa
• Application facile, postulez en moins de 5 minutes directement depuis votre appareil mobile
• Offrez des dates d'échéance de paiement flexibles qui vous permettent de choisir n'importe quelle date d'échéance disponible qui correspond à votre calendrier de paiement
• *Afficher le contrat du titulaire de carte

Frais annuels 35 $ APR régulier 18,89 % (Variable) Intro APR Intro APR Achats N/A , Intro APR Transferts de solde N / A ,

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Carte de crédit Indigo® Mastercard®

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La carte de crédit Indigo® Mastercard® offre aux consommateurs ayant un faible crédit la possibilité d'utiliser une carte de crédit pour leurs dépenses quotidiennes. La pré-qualification est rapide et facile et si vous avez le profil de crédit requis, vous pourrez peut-être obtenir une carte de crédit sans frais annuels. (0 $ - 99 $ de frais annuels).

Lire la critique Exigences en matière de pointage de crédit :les exigences en matière de pointage de crédit sont basées sur les propres recherches de Money Under 30 sur les taux d'approbation ; atteindre le score minimum vous donnera les meilleures chances d'être approuvé pour la carte de crédit de votre choix. Si vous ne connaissez pas votre pointage de crédit, utilisez notre outil d'estimation de pointage de crédit gratuit pour avoir une meilleure idée des cartes auxquelles vous serez admissible. * Money Under 30 utilise un score FICO 8, qui est l'un des nombreux types de scores de crédit. *Un créancier peut utiliser un score différent lorsqu'il décide de vous approuver ou non pour un crédit. Poor 500-599 Fair 600-699 Good 700-749 Excellent 750-850

What We Like:

• $0 – $99 annual fee

• Easy pre-qualification process

• Previous bankruptcy is OK

• Easy pre-qualification process with fast response
• Less than perfect credit is okay
• Online servicing available 24/7 at no additional cost
• Unsecured credit card, no security deposit required
• Account history is reported to the three major credit bureaus in the U.S.

Annual Fee $0 - $99 Regular APR 24.9% Intro APR Intro APR Purchases N/A , N/A Intro APR Balance Transfers N/A ,

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Milestone Mastercard®

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In A Nutshell

If you have lousy credit and are looking for a way to build it back; the Milestone Mastercard® is a strong option. There’s a quick pre-qualification process with no impact to your credit score, modest interest rate and an annual fee of $35 – $99.

Read review Credit Score Requirements:Credit Score requirements are based on Money Under 30’s own research of approval rates; meeting the minimum score will give you the best chance to be approved for the credit card of your choice. If you don’t know your credit score, use our free credit score estimator tool to get a better idea of which cards you’ll qualify for. *Money Under 30 uses a FICO 8 score, which is one of many different types of credit scores. *A creditor may use a different score when deciding whether to approve you for credit. Poor 500-599 Fair 600-699 Good 700-749 Excellent 750-850

What We Like:

• $35 – $99 annual fee

• Easy pre-qualification process

• Previous bankruptcy is OK

• Instant pre-qualification is available for those who qualify
• Less than perfect credit is okay
• Access your account online or from your mobile device 24/7
• Account history is reported to the three major credit bureaus in the U.S.

Annual Fee $35 - $99* Regular APR 24.9% Intro APR Intro APR Purchases N/A , N/A Intro APR Balance Transfers N/A ,

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Best for Rebuilding Credit:Petal® 1 “No Annual Fee” Visa® Credit Card

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• Annual fee:$0.
• APR range:22.24% - 31.74% Variable.
• Rewards:2%-10% cash back at select merchants.
• Other features:ideal for individuals with limited or no credit.

Why the Petal® 1 “No Annual Fee” Visa® Credit Card is a good option for those with poor credit

The Petal® 1 “No Annual Fee” Visa® Credit Card is perfect for those with low credit because the issuer of the card looks beyond your credit score to qualify you. They look at your overall banking history, and, if you’re qualified, you can get a credit limit between $300-$5,000. And you won’t need to pay a deposit to get this line of credit.

Plus, you can easily start building your credit with on-time monthly payments, because your payment history gets reported to all three credit bureaus.

How to use the Petal® 1 “No Annual Fee” Visa® Credit Card

The Petal® 1 “No Annual Fee” Visa® Credit Card is incredibly easy to use. To start building your credit using the card, simply pay your balance on time each month, and gradually, your score should improve.

In addition, Petal’s mobile app is very intuitive, so you can easily manage your money, track your spending, and automate payments, all with a few clicks.

Why you might not want to consider the Petal® 1 “No Annual Fee” Visa® Credit Card

Although you can qualify with a low credit score, your interest rate will be higher than you’d get with other credit cards at 22.24% - 31.74% Variable.

You’ll also find that you get better cash back rewards with the Petal® 2 "Cash Back, No Fees" Visa® Credit Card, which issues 1%-1.5% on all purchases, as well as the same 2%-10% cash back from certain merchants.

Learn more about the Petal® 1 “No Annual Fee” Visa® Credit Card or read our full review .

Best Low Deposit Credit Card:Capital One Platinum Secured Credit Card

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• Annual fee:$0.
• APR range:26.99% (Variable).
• Rewards:N/A.
• Other features:Access to Credit Wise, a free credit monitoring service.

Why the Capital One Platinum Secured Credit Card is a good option for those with poor credit

With the Capital One Platinum Secured Credit Card, you will get an initial credit line of $200, with the security deposit of $49, $99, or $200.

How to use the Capital One Platinum Secured Credit Card

Cardholders will be automatically considered for a higher credit line in as little as six months.

No additional deposit will be required if your credit line is increased.

Why you might not want to consider the Capital One Platinum Secured Credit Card

The increasing credit line might tempt you to also increase your indebtedness. If you have poor credit, getting deeper into debt is the last thing you need. Take this card only if you are able to pay off the balance each month.

Learn more about the Capital One Platinum Secured Credit Card or read our full review.

Best for No Credit Check:OpenSky® Secured Visa® Credit Card

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• Annual fee:$35.
• Regular APR:18.89% (Variable).
• Rewards:N/A.
• Other features:There’s no credit check or bank account required to apply for the card.

Why the OpenSky® Secured Visa® Credit Card is a good option for those with bad credit

The great thing about the OpenSky® Secured Visa® Credit Card is that there is no credit check. So you don’t have to worry if you have bad credit:OpenSky is not going to pull your credit report.

Plus, you can set your own credit limit. So, if you’d like to reduce temptation and keep your credit limit low, just put down a security deposit of $200 (their minimum required deposit) while you get acclimated to the card.

How to use the OpenSky® Secured Visa® Credit Card

When using the OpenSky® Secured Visa® Credit Card, you will put down a security deposit of your choice (between $200 and $3,000), which will serve as your credit limit.

Use the card to make purchases — small, everyday purchases are best — and then pay your bill off in full every month by the due date. If you can’t pay it in full, at least pay the minimum amount due, and pay it on time to avoid penalties. Those payments will be reported to the three credit bureaus, which can then boost your score.

Why you shouldn’t use the OpenSky® Secured Visa® Credit Card

If you’re still struggling to manage your credit and the temptation of a credit card is too much, even the OpenSky® Secured Visa® Credit Card might not be a good fit. Managing credit wisely is a learned skill, so be sure you’re ready to handle credit again before signing up for a card.

Learn more about the OpenSky® Secured Visa® or read our full review.

Best for Recent Bankruptcy:Indigo® Mastercard® Credit Card

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• Annual fee:$0 - $99.
• APR range:24.9%.
• Rewards:N/A.
• Other features:You won’t need to pay a security deposit.

Why the Indigo® Mastercard® is a good option for those with poor credit

If a recent bankruptcy is the reason for your poor credit score, the Indigo® Mastercard® Credit Card is the card to start your rebuilding effort with. They report to all three major credit bureaus, so you’ll be able to begin building a new credit reference quickly.

The card is also unsecured, so you won’t have to worry about a security deposit.

How to use the Indigo® Mastercard® Credit Card

Make your payments on time each month, and you’ll begin to develop a good credit reference with each of the three major credit bureaus.

Even better, pay off your balance each month to avoid any chance of either owing more than you can pay, or risking a late payment.

Why you might not want to consider the Indigo® Mastercard® Credit Card

This is another credit card with a steep annual fee. It can go all the way up to $99.

Learn more about the Indigo® Mastercard® Credit Card or read our full review.

Best for No Credit:Milestone Mastercard®

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• Annual fee:$35 - $99*.
• APR range:24.9%.
• Rewards:N/A.
• Other features:No security deposit required.

Why the Milestone Mastercard® is a good option for those with poor credit

The Milestone Mastercard® reports to all three major credit bureaus. Your initial credit line will be no less than $300, with no security deposit required.

How to use the Milestone Mastercard®

As is the case with all credit cards for people with bad credit, it’s critical to make your monthly payments on time. You should also make every effort to pay your balance in full each month.

Why you might not want to consider the Milestone Mastercard®

Depending on your credit profile, the annual fee will be $35, $59, or $75 (the latter switches to a $99 annual fee after the first year for subsequent years).

Learn more about the Milestone Mastercard® or read our full review.

How We Came Up with This List

Credit cards for FICO scores below 500 is a very specialized credit card category. We started by identifying those cards that do service this market sector. We then looked for certain specific factors we felt made these cards particularly suitable for this credit score range.

Those factors include:

• Cards that are available to those with the lowest credit scores.
• The issuer reports to all three major credit bureaus — TransUnion, Experian and Equifax — giving you an opportunity raise your credit score with all three.
• Secured or unsecured credit cards — secured may be necessary for those with the worst credit profiles.
• Cards with small, but reasonable initial credit limits. They must be high enough to be usable, but not so high as to put you deep in debt.
• Low or no annual fee (maximum under $100).
• Offering the ability to increase your credit line as your payment history warrants.
• Card features, like rewards and other benefits, if offered.

What Is a Bad Credit Score?

The definition of bad credit depends on the lending institution. There are general credit score ranges that are considered to represent excellent, good, fair, and bad credit. But each lending institution sets its own standards.

For example, one lender may consider bad credit to be a score of less than 580. Another may see it as beginning at 620 and below. But in the vast majority of cases, a credit score of 500 or below will be considered very bad credit. That will severely limit your options as to where you can apply for credit and the types of credit you can apply for.

The specific issue with credit cards is that they are generally unsecured loans. If you’re unable to pay your debt, there’s no collateral the lender can go after to satisfy the unpaid balance. This is the reason lenders are so selective when issuing credit cards, and especially with those cards that have the best terms and benefits.

How to Get a Credit Card with Bad Credit

If your credit score is 500 or below, you won’t be able to find credit cards in the places people typically look. A credit score that low is determined to be bad credit. Options for credit cards will be extremely limited.

To find a credit card for you, you’ll have to do two things:

• Ignore the many advertisements for low interest rate cards, with perks like rewards and 0% introductory APR’s. You won’t qualify for those, but you can get seriously distracted trying.
• Focus on the card providers who specifically offer cards for people with bad credit. They are available, and we have them listed in this article.

The Most Important Features of Credit Cards If Your Score Is 500

Searching for a credit card when your credit score is in the 500 zone is different than shopping for credit cards for good credit. The emphasis is far less on factors like rewards points or cash back, travel perks, or a 0% introductory balance transfer offer.

With a score below 500, your main objective is to just get a credit card with the most basic features. The primary purpose is to enable you to either establish or improve your credit score. Only when you can do that will the more attractive credit cards be available to you.

When shopping for a credit card when your FICO score is below 500, the following features are most relevant:

Annual Percentage Rate (APR)

If you have bad credit, a high interest rate will be a fact of life. You can easily be assigned an APR of 30% or higher.

Since your interest rate will be high, you’ll need to focus on paying off your balance every month. That will lower the cost of keeping the card, since you’ll at least remove interest expense from the equation.

Annual Fee

It might make sense to pay an annual fee for a high-end, unsecured travel or cash back card, which will probably earn enough in rewards to make up for its annual fee and then some.

But it’s harder to justify paying an annual fee for a secured, credit rebuilding card, which will likely offer very basic features.

Try to cut costs where you can by going for a secured card with no annual fee. We’ve got a few no annual fee cards included on our list. But keep in mind that since your primary motivation is to improve your credit score, a card with a small annual fee will still help you accomplish that goal — though at a higher cost.

Additional Card Benefits

On the bright side, it is possible (albeit rare) to find credit cards for bad credit that offer benefits like cash back rewards, or $0 liability for unauthorized charges. Some of the cards on our list do offer these benefits.

Collision damage waivers on rental cars may also be available, but credit limits are usually too low to take advantage of this benefit.

How Do Secured Credit Cards Work?

Credit cards for bad credit will typically be secured cards, though there are few unsecured credit cards that may also be available to those with a low credit score. There are benefits in each case.

Secured Cards

A secured credit card will usually provide a credit limit equal to the amount of its security deposit. For example, if you place a deposit for $500, your credit limit will typically be $500.

Even though your card is secured, you’ll still have to make timely monthly payments on the balance owed, just as you would for an unsecured card. And of course, that payment performance is what will be reported to the credit bureaus.

The obvious disadvantage of a secured card is that your credit limit is determined by the amount of cash you have available for the deposit. And if you have no cash at all, you won’t be able to open a secured card.

But there are several advantages to having a secured card:

• Secured cards work just like regular credit cards, and can be used in the same way.
• They provide you with a credit card for those circumstances where they may be required over cash or some other payment method.
• If the card’s issuer reports to all three credit bureaus, that will enable you to improve your credit score.
• Because they’re secured with a deposit, secured credit cards may come with either a very low annual fee, or none at all.
• Most secured card issuers will automatically increase your credit limit after a few months of favorable payment history.
• Most card issuers will convert your account to unsecured once you develop a favorable payment history.

Unsecured Cards

Unsecured cards offer all the benefits of secured cards, but an unsecured card is typically preferred for the obvious reason that cardholders are not required to put up a security deposit. This keeps more of your cash free.

The biggest downside to unsecured cards is that they often charge high annual fees. The annual fee is treated like any other card charge/purchase. If you don’t pay the fee off, you’ll pay interest on the amount you owe.

But the annual fee might be worthwhile if:

1. You pay the annual fee charge off immediately and thus avoid interest charges.
2. You take full advantage of the card’s overall benefit package, or earn rewards points or cash back valued in excess of the card’s annual fee.

The table below summarizes the difference between secured and unsecured credit cards:

	Secured cards	Unsecured cards
Make purchases on credit	Yes	Yes
Report to all 3 credit bureaus	Yes	Yes
Annual fee	Usually very low (≤$35)	Can be as high as $500+
Interest rate	Usually 18%-30%	Usually 15%-25%
Automatic credit line increases	Yes	On some only
Convert to unsecured	Generally, yes	N/A

How to Properly Use a Credit Card for Bad Credit

If you get approved for a credit card for bad credit — great! But please understand the card can either help you or hurt you.

Here are some best use practices to implement for these cards:

Pay Off Your Balance Quickly and Regularly

There are three basic problems with carrying a balance:

• Balances incur interest, and that raises the cost of having the card.
• Carrying a balance further reduces an already low credit limit.
• Carrying a balance increases the chance of you defaulting on your debt.

All three of those complications can be avoided by living within your means, not overspending, and paying off your balance in full every month.

Don’t Get a Card with an Annual Fee

A large annual fee will eat into your expendable income and increase the likelihood of you carrying a balance and incurring interest charges.

You want to use a credit card to improve your credit. But a very high annual fee could make the cost of doing so too high.

Put Small Charges on Your Card

No matter what type of card you get, this is probably the single most important practice. Be sure any charges you incur can be easily repaid when the credit card bill comes in next month. Those should be small, routine charges.

A $10 charge here, and a $20 charge there — and no more than one or two per month — will enable you to improve your credit through small monthly payments. But at the same time, it won’t put you into a position where you’ll have a balance you can’t pay off completely.

How to Improve Bad Credit

We’ve already pointed out that the specific type of card you can get will depend on your creditworthiness. You’ll get a better card if your credit score is 585, versus 500. For that reason, you should take steps in advance to maximize your credit score before applying.

In addition to paying your bills on time and keeping your credit card balances low, you can also use a service like Experian Boost to achieve the score required to get the card you want. Experian customers, on average, boosted their score by 13 points. So while it won’t completely transform your credit, it can be a great way to start moving those numbers in an upward direction.

Start Out By Getting Your Free Credit Score

As we noted earlier, this is the most important step. You need to know exactly where your credit score is at before applying. You also need to be aware of the factors causing the score that you have.

Dispute Any Errors

If there is any information contained in your credit report that’s not accurate, you’ll have an opportunity to fix it. Contact the creditor, report the error, and provide written documentation proving it’s wrong.

Get written notification from the creditor acknowledging the error. Also, request the creditor report corrected information to all three credit bureaus. If they don’t, you’ll have to send the notification from the creditor acknowledging the error to all three bureaus yourself.

Allow at least 30 days after the successful dispute before pulling your credit score again, and making an application for a credit card.

Pay ALL Your Bills on Time from Now On

Whether you’re about to apply for a credit card, or you just got a brand new one, resolve to pay all your bills on time from now on.

That applies not just to your credit card, but to all obligations. Though landlords and utility companies don’t report your good payment history to the credit bureaus, they will report delinquencies. This is particularly true of unpaid balances.

Make sure that doesn’t happen. Unpaid balances, like collections and judgments, will drive your credit score even lower.

Pay Off Any Past Due Balances

If your credit report shows any unpaid balances, you should settle them as soon as possible. This includes collections, charge-offs, and judgments. Paying them off won’t remove the delinquency from your credit report, but a paid account always works better on your credit report than an open one.

Plan to Open a New Credit Card Every Six Months or So

We said earlier you shouldn’t apply for several credit cards at once. But once you have a credit card open, and you have a good payment history, it will then be time to apply for a second.

New applications should be at least six months apart. The purpose is so that you can begin building multiple positive credit references. Those will improve your credit score much more quickly than a single credit line.

But apply all the other rules we recommended. Keep your charges low, and pay off your balance each month. That’ll make sure your credit rebuilding efforts work exactly as they’re supposed to.

Alternative Cards for People with Credit Scores Around 500

Credit cards aren’t the only payment methods for people with credit scores under 500. There are several other payment types you can investigate.

Should I Just Use a Debit Card?

Debit cards have evolved to the point where they function very much like credit cards. You can generally use them anywhere credit cards are accepted.

But there are some factors you need to be aware of…

A Debit Card Can’t Help You Build Credit

A debit card doesn’t involve monthly payments. For that reason, the issuer doesn’t report your account information to the credit bureaus. That removes any possibility the debit card will help you to rebuild your credit.

A Debit Card Can Help You Control Spending

One of the big advantages of a debit card is that you can’t spend any more money than you have in the account it’s connected to. The account balance serves the same function as a credit limit on a credit card.

But it doesn’t actually provide you with credit — you won’t be able to spend money you don’t have. That’s a major positive if you’ve had trouble managing your finances in the past, and ended up spending more than you actually had.

Should I Use a Prepaid Card?

Prepaid cards serve a purpose, but they’re even more limited than debit cards.

How Do Prepaid Cards Work?

Prepaid cards work similarly to debit cards, except you don’t have a bank account connected to the card. Instead, you purchase the card, and the amount you pay for it serves as the credit limit. They often work just like credit and debit cards, except you have to pay the spending limit in advance.

After you purchase the card, you can “recharge it” by adding more money to it. You can continue using the card as long as it has money on it.

Are Prepaid Cards a Good Idea?

The basic purpose of prepaid cards is so that you’ll have a card to use in those situations where it’s required. There is an increasing number of merchants and vendors who don’t accept cash. A prepaid card can enable you to transact in such places.

This can be especially important if you want to make online purchases. You’ll absolutely need a card to do that, and a prepaid card will work in that situation.

On the downside, prepaid cards don’t provide a credit reference. If your goal is to increase your credit score, they’ll have zero effect.

Another negative is fees. You’ll have to pay a fee to purchase the card, and even a fee each time you recharge it. It’s an expensive way to gain use of a card for financial transactions.

What About Store Credit Cards?

Store cards are best described as limited-use credit cards.

How Do Store Cards Work?

Store cards are actually credit cards issued by specific merchants. You’re provided with a credit limit, you’ll pay interest on any outstanding balance, and the merchant will generally report your payment history to the credit bureaus.

So far so good.

Are Store Cards a Good Idea?

Store cards have several downsides:

• They’re not general usage credit cards — they can only be used with the issuing merchant.
• They generally charge very high interest rates.
• If you have bad credit, you probably won’t be approved.
• Store cards are established to encourage you to spend money with the merchant. If you have bad credit, going deeper into debt is the last thing you need to do.

There’s one other factor you need to be aware of with store cards. Credit card operations are not a main line of business for merchants. For that reason, store credit card operations can be disorganized. That can lead to erroneous credit reporting, which will usually work against you.

For those reasons, they’re not recommended if you’re trying to rebuild credit.

The Advantages and Disadvantages of Debit, Prepaid, and Store Cards

	Debit cards	Prepaid cards	Store cards
Require credit approval?	Limited	No	Yes
Report to credit bureaus?	No	No	Yes
Will improve your credit score?	No	No	Possibly
Purchases subject to interest charges?	No	No	Yes

Types of Cards to Avoid If You Have Bad Credit

If you have bad credit, you may assume getting approved for any card is a step in the right direction. While that might sometimes be true, there are situations you’ll definitely want to avoid.

Cards with High Annual Fees

You certainly don’t want to get into a situation where you’ll have to pay $150 for a $400 credit line. On a percentage basis, that annual fee is just too high.

Even worse, it increases the likelihood you’ll be carrying a balance on the card. And with interest rates in excess of 20% per month, that will make the annual fee even higher. It will be interest on a charge that provided absolutely no benefit to you either.

Cards with High Fees in General

The annual fee isn’t the only fee you need to be concerned with. There are others, and while they may be infrequent, they can really add up.

Some examples include:

Late payment fees . These are generally in the $35-$40 range, even on credit cards with good credit. But since your credit limit will be much lower, they’ll have a much bigger impact. Late payments must be avoided since you’re trying to improve your credit score.

Balance transfer fees . These are generally in the 3% to 5% range, but they often have flat fee minimums of $10. Again, these will eat into a small credit limit.

Cash advance fees . You may be tempted to take cash advances, but they’re costly. They can amount to 3% to 8%, with a minimum of $10.

All credit cards charge these fees, but it should be your plan to avoid having to pay any of them. Also, you should completely avoid any card that has fees in excess of those listed above.

High-Spend Credit Cards

Yes, everyone wants a credit card with a high credit limit and generous rewards. But if your credit score is below 500, these are the exact types of cards you need to avoid!

High credit limits and generous rewards — which are specifically designed to get you to use the card more frequently — are a one-way ticket to a high credit card balance. If you struggled with credit in the past, this can leave you with a debt you can’t afford to pay. That will lead to late payments, and a further deterioration of your credit score.

Never forget that your primary purpose in taking a credit card when your score is below 500 is to improve that score. You should specifically avoid doing anything that holds the potential to make matters worse.

FAQ

What Happens If I Miss a Credit Card Payment?

If you miss a credit card payment you’ll likely be charged a late payment fee of between $35 and $40. Most cards will also increase your interest rate, perhaps to as high as 29.99% APR. Even worse, your effort to rebuild your credit will be stalled. Not only will the late payment be reported to the major credit bureaus, but the likelihood of having your credit limit increased or moved from secured to unsecured status will be jeopardized.

How Do You Prequalify for a Credit Card?

To prequalify for a credit card you’ll fill out a brief online application, and you’ll typically receive an immediate response letting you know if you’re eligible. Once you have confirmation of eligibility you can then complete a full application.

Can I Make Balance Transfers with a Secured Credit Card?

On most credit cards for people with bad credit, you are able to make balance transfers. Those transfers are complicated by very low credit limits, and the higher interest rates that are typically charged on such transactions. In addition, there is usually a balance transfer fee of at least 3% of the amount transferred.

How Long Will It Take Before I Can Apply for a Better Credit Card?

That depends on two things:how bad your credit situation is now and how well you manage your current credit card. If your low credit score is mainly the result of very little credit in combination with a couple of late payments, you may see your score rise considerably after just a few months. But if you have a history of late payments, or a recent bankruptcy, you may need to use one of these cards for at least a couple of years before trading up.

How Much Use Can I Get Out of a Credit Limit of Just $200 or $300?

In truth, not much. But that’s not the point of credit rebuilding cards. The idea is to use them to make small charges, and then repay promptly. Your whole strategy needs to be to develop the kind of credit payment history that will increase your credit score, and make you eligible for better card offers. For this reason, the small size of the available credit limit isn’t a major factor.

Résumé

It’s easy to feel discouraged by what seems like a limited number of card options available to those with bad credit scores. But the cards that are available to you can serve as a serious stepping stone in your journey to greener financial pastures.

You should typically start to see significant improvements to your credit score after you’ve made on-time, in-full payments with your secured card for about a year. Then you can find a more valuable credit card for your new and improved credit score via these articles:

• Best credit cards for a credit score above 750
• Best credit cards for a credit score between 700 – 749
• Best credit cards for a credit score between 650 – 699
• Best credit cards for a credit score between 600 – 649

Petal credit cards are issued by WebBank, Member FDIC.