Best Credit Cards for Bad Credit of October 2024

Benzinga found that the best credit card for bad credit is a secured credit card. Capital One and Discover it top our list for this month.

If you have bad credit, you might think your chances of obtaining a credit card are slim, but there are still several viable options available. One popular choice is a secured credit card, which requires a security deposit that acts as your credit limit, making it easier to gain approval even with poor credit. Additionally, some credit card companies offer products specifically designed for individuals with bad credit; these cards may come with higher interest rates but provide a valuable opportunity to rebuild your credit history over time. Peer-to-peer lending platforms or credit unions may also provide alternative options that cater to those with less-than-perfect credit scores. By exploring these avenues, you can gradually improve your credit standing and enhance your chances of accessing better credit options down the line.

Benzinga reviewed some of the best credit cards for bad credit for this month to help you make an informed decision. Compare features and benefits of each to find the right card for your.

Quick Look at the Best Credit Cards for Bad Credit:

• Best Overall for Bad Credit: Capital One Platinum Secured Credit Card
• Best for No-Fee Deposit: Discover it Secured Credit Card
• Best for Rebuilding Credit: OpenSky Secured Visa Credit Card
• Best for Cashback and Rewards: U.S. Bank Cash+® Secured Visa® Card
• Best for Consumers With No Credit: Capital One Quicksilver Secured Cash Rewards Credit Card

Best Credit Cards for Bad Credit

Here are our top recommendations for the best cards for bad credit to help you rebuild your financial standing.

1. Best Overall for Bad Credit: Capital One Platinum Secured Credit Card

The Capital One Platinum Secured Credit Card is a top pick for folks aiming to boost their credit. It's super straightforward, with no annual fee, no foreign transaction fee and no penalty annual percentage rate (APR). The flexible security deposit ranges from $49 to $200 based on your credit history. The deposits qualify you for a credit limit from $200 to $1,000, which could increase after six months of timely payments. It reports payment history to all three major credit bureaus.

Why We Picked It: With its low fees, flexible security deposit, automatic credit line review and valuable credit monitoring features, it can be a valuable tool in your journey towards financial stability.

2. Best for No-Fee Deposit: Discover it Secured Credit Card

The Discover it Secured Credit Card stands out with valuable rewards and the opportunity to reclaim your security deposit. There's no annual fee, foreign transaction fee or late fee for your first payment. You'll earn 2% cash back on up to $1,000 in combined purchases at gas stations and restaurants every quarter and 1% cash back on all other purchases. The issuing bank also reports to the three major credit bureaus, helping you build credit. After seven months, it automatically reviews your account for a potential upgrade to an unsecured credit card.

Why We Picked It: With its cash back rewards, no annual fee and easy approval process, this Discover card is a great choice for anyone in need of a secured credit card.

3. Best for Rebuilding Credit: OpenSky Secured Visa Credit Card

The OpenSky Secured Visa Credit Card doesn't require a credit check, bank account or minimum credit score. With a low annual fee of $35, and a reasonable variable annual percentage rate (APR) of 29.99%, it's affordable. You can choose your credit limit between $200 and $3,000, based on your security deposit. The credit card also offers cash back rewards of up to 10%. Plus, it reports your activity to the major credit bureaus. Rebuilding credit can take time, but this can help.

Why We Picked It: With its no credit check requirement, reporting to major credit bureaus and low fees, this card can help you on your journey to improving your credit score and financial health while getting rewarded with its cash back offer.

4. Best for Cashback and Rewards: U.S. Bank Cash+® Secured Visa® Card

The U.S. Bank Cash+® Secured Visa® Card offers great credit card rewards, including 5% cash back on the first $2,000 spent quarterly in two chosen categories and 5% cash back on certain travel reservations. You'll also get 2% cash back on one everyday category, such as gas, grocery and restaurants, and 1% cash back on all other purchases.

To start, make a refundable security deposit of $300 to $5,000, which also sets your credit limit. There’s no annual fee, and you can pick your payment due date, making it a convenient choice for building credit while earning rewards.

Why We Picked It: With a competitive rewards program, no annual fee and the flexibility to choose your payment due date and the opportunity to earn rewards on everyday purchases, this credit card offers a solid combination of benefits for cardholders.

5. Best for Consumers With No Credit: Capital One Quicksilver Secured Cash Rewards Credit Card

The Capital One Quicksilver Secured Cash Rewards Credit Card presents a valuable opportunity for people with limited credit to build a positive credit history while enjoying rewards and financial flexibility. You can start with a minimum refundable deposit of $200, which becomes the credit line. The card offers 1.5% cash back on all purchases and a generous 5% cash back on hotel and rental car bookings through Capital One Travel without any caps. 

Also, there are no annual or foreign transaction fees, making it convenient for international use. After just six months, the Capital One provides automatic credit line reviews and offers a pathway to upgrade to an unsecured version, allowing users to reclaim their deposits. 

Why We Picked It: The Capital One Quicksilver Secured Cash Rewards Credit Card is an excellent choice for consumers with no credit or a poor credit score who are looking to build or rebuild their credit while earning cash back rewards. 

What Causes Bad Credit?

Bad credit refers to a track record of failing to pay bills or repay loans on time. A bad credit score makes lenders concerned about the risk of repayment. The lower the score, the higher the lending risk.

Various factors contribute to a bad credit score:

• Payment history: This factor is the cornerstone of your credit score, comprising 35%. Lenders report payment delays or defaults to the credit bureaus, dragging down your credit score.
• High credit utilization: When you use up a significant portion of available credit, it signals you may have repayment difficulties later on. Credit utilization accounts for a significant 30% of your credit score.
• No or very little credit history: Limited or no credit history means insufficient data to assess your creditworthiness. It contributes 15% of your score.
• No credit mix: Lack of credit mix refers to not having diverse types of credit like credit cards or loans. Credit mix makes up 10% of your score, and a varied credit mix demonstrates the ability to manage different credit obligations effectively.

When to Use a Credit Card for Bad Credit

You might need a credit card for bad credit if:

• Your credit score is below 579: Most lenders consider a credit score below 579 to be poor. This score can limit your approval chances for loans or mortgages. Some of the best cards for bad credit are secured cards, requiring a refundable security deposit. They can help you rebuild your credit score by showing that you can make on-time payments and use credit responsibly. 

• You have a limited credit history: A limited credit history makes it difficult for lenders to assess your creditworthiness. Starter cards designed for those with no credit history can help establish a credit record. They typically offer features like credit education, automatic credit line increases and no annual fees.

What Is the Easiest Card to Get With Bad Credit?

When struggling with poor or no credit, you need access to cards that you can still qualify for. The easiest credit cards to get if you have bad credit include:

• Secured credit cards: A secured credit card requires you to make a security deposit that acts as collateral and determines your credit limit. The deposit is usually refundable when you close the account or upgrade to an unsecured card. A secured credit card can help you build or rebuild your credit history if you use it responsibly and pay your bills on time. 

• Store credit cards: A store credit card can only be used at a specific retailer or a group of affiliated stores. These cards tend to offer easier approval than regular credit cards, but they also have higher interest rates and lower credit limits.  

Should You Get Unsecured Credit Cards for Bad Credit?

Using an unsecured credit card for bad credit presents both opportunities and risks. While it can help rebuild your credit when managed responsibly, these cards often carry higher interest rates and fees with lower credit limits than standard cards.

High interest rates mean you could pay substantial finance charges if you maintain a balance. Also, annual application fees can quickly eat into your available credit.

These cards typically come with lower credit limits, making it challenging to control spending and maintain a low credit utilization ratio. However, using them responsibly can gradually enhance your credit score.

How to Choose a Credit Card for Bad Credit

The aim of getting a credit card for bad credit is to improve your credit score and financial situation. Here are things to look for:

• Know your credit score: Before applying for a credit card, find out your credit score. You’ll have an idea of where you stand and which cards you may qualify for.

• Look for issuers that report to the major credit bureaus: Ensure the issuing bank reports your payment history to the major credit bureaus. These reports will help you establish a positive credit history over time — if you make timely payments.

• Review credit card fees and other charges: Pay close attention to the annual fees, late payment fees, interest rates and other costs associated with the credit card. Settle for an affordable card that won't add unnecessary financial burden.

• Look for credit-building features: Some credit cards for bad credit offer features designed to help you improve your credit score, such as credit monitoring tools, automatic credit limit increases and rewards for responsible credit behavior. Consider these features when choosing a card to maximize its benefits for your financial health.

How to Improve Your Credit Score if You Have Bad Credit

Follow these quick tips to nurture and improve your credit score:

• Regularly review your credit reports for errors and inaccuracies to safeguard your score.
• Ensure on-time bill payments every month to uphold a positive payment history.
• Maintain a low credit utilization ratio using less than 30% of your available credit.
• Minimize new credit inquiries to prevent temporary score decreases.
• Diversify your credit portfolio to build a robust credit history.
• Keep old accounts open and address any negative items on your report to maintain creditworthiness.
• Monitor your credit score regularly and use free credit-monitoring services for proactive management.
• Consider consulting with a credit repair specialist, who can provide personalized advice and strategies to navigate the complexities of credit improvement effectively.

Finding Your Way with Bad Credit

These special credit cards offer a chance to rebuild your financial strength. Whether it's Capital One's Platinum Secured card or the rewards of U.S. Bank Cash+, each option helps you get back on track. Just remember to stick to your payments and spend wisely. With time, your credit score will rise, opening doors to new opportunities. So, pick the right card for you, use it responsibly and watch your credit improve step by step.

Frequently Asked Questions