Credit cards provide a lot of convenience for consumers. You can use them in a variety of places, including online. Credit cards are also a good way to build your credit score, which can be important when you apply for other loans, housing, and even insurance.
There are two main types of credit cards — secured and unsecured. The common belief is that you need good credit if you want an unsecured card. However, there are some unsecured credit cards for bad credit. Here’s what you need to know.
- The difference between secured vs. unsecured credit cards
- Can you get an unsecured card with bad credit?
- Unsecured credit cards to consider if you have bad credit
- Why we picked these particular cards
- Frequently asked questions
The difference between secured vs. unsecured credit cards
A secured credit card is one that has a minimum deposit requirement (or security) in order for you to have an account. This upfront security deposit, which is generally refundable, acts as the available credit limit on your card. And if you default, the money you provided as a deposit can be used by the issuer to offset its losses.
On the other hand, an unsecured credit card is one that requires no deposit. Instead, your financial reputation is enough for the card issuer. The issuer takes on the risk in the event that you default, since there’s no security for it to fall back on.
|Secured credit card||Unsecured credit card|
|Credit limit||Typically equal to the cash you deposit||Varies based on your creditworthiness; can be quite low if you have no credit or bad credit|
Why you might want to get a secured card
A secured credit card may work well for those with limited credit or those who wish to rebuild their credit. As mentioned, these cards require a security deposit, and your credit limit can vary depending on the card issuer. But you might also get access to perks like free credit monitoring or travel accident insurance, depending on the card you choose. With an unsecured card, you won't need to pay a security deposit, but you might have to pay an annual fee.
Another reason to consider a secured card is that you can get a guaranteed credit limit if you have the cash to use as a deposit. Secured cards typically will issue you a credit line equal to your deposit. With unsecured credit cards designed for those with bad credit, you might end up with a credit limit of $500 or less, and you won't necessarily know what it will be until you're approved. In fact, my first unsecured credit card as a student with a thin credit file came with a limit of $200.
There are even secured credit cards that offer cashback rewards. With the Sable Secured Credit Card you can earn 2% cash back on purchases at Amazon, Uber, Uber Eats, Whole Foods, Netflix, Spotify, and more; plus, 1% cash back on all other purchases. You'll also get a dollar-for-dollar match of the cash back you earn during your first year and this card has a $0 annual fee. You might also be able to graduate to an unsecured card after a period of time.
So, if you’re looking for a way to rebuild your credit, possibly with some perks and the chance to get a solid credit line, a secured credit card can be a good choice. You might not need a secured credit card, though. And, in some cases, an unsecured card might be your best option.
Why you might want to get an unsecured card
If you’re just looking to get started with credit or don’t have the cash for a deposit, unsecured credit cards designed specifically for bad credit can help you move forward. Additionally, an unsecured card might (but not always) come with a higher credit limit. Because your credit limit isn’t based on your deposit, your credit issuer might take a chance on you.
Finally, an unsecured card doesn’t put your cash at risk. With a secured card, if you end up defaulting, the creditor can immediately claim your deposit, and you’re out the money. An unsecured card doesn’t carry that same level of risk. A creditor can sue you for the money, but they aren’t automatically entitled to what you owe them — they have to take extra steps.
Can you get an unsecured card with bad credit?
Even if you have poor credit, you can typically still get an unsecured card. There are specific unsecured credit cards designed to give those with bad credit a second chance — or help you build from scratch.
Be forewarned that unsecured cards for bad credit are likely to have a low credit limit to begin with (although this can be a good thing to keep you from getting in over your head again). Plus, some unsecured credit cards for bad credit come with annual fees that can be pretty steep. Finally, the interest rate on a lot of these cards can be quite high — often over 20% regular APR (annual percentage rate). You’ll need to pay off your card each month to avoid costly interest charges.
All of this to say that you can indeed get an unsecured card with bad credit, but you’ll need to pay attention to the fine print.
Unsecured credit cards to consider if you have bad credit
If you’re looking for the best unsecured credit cards specifically for people with bad credit, these four could be good choices. They allow you to start rebuilding or building credit without onerous requirements — and even come with some perks and incentives.
|Card||Annual fee||Rewards and/or features|
|Credit One Bank Platinum Visa For Rebuilding Credit||Varies||
|Petal 1 Visa Credit Card||$0||
|FIT Mastercard Credit Card||$99 (plus a one-time processing fee of $89.00 and a monthly maintenance fee of $75, billed at $6.25 per month (monthly maintenance fee not billed for first 12 months))||
|Destiny Mastercard||$99 (varies depending on which card you qualify for: either $59 per year or $75 the first year, then $99 after)||
Credit One Bank Platinum Visa For Rebuilding Credit
Those with bad credit might want to consider the Credit One Bank Platinum Visa For Rebuilding Credit, as you don't necessarily need good credit to get approved for this card. However, the rewards you have access to and the fee you pay might be determined by your credit history. On the plus side, you’ll be able to track your credit progress by getting your Experian score free each month. You may also get some cash back, depending on the card you end up with.
However, you have to watch out for the annual fee of $75 $99.
Read our full Credit One Bank Platinum Visa for Rebuilding Credit review.
Petal 1 Visa Card
If you're interested in a card that offers a higher minimum credit limit, the Petal 1 Visa Card might be worth considering. This credit card offers an initial credit limit between $500-$5,000, though the total you'll likely receive will depend on your creditworthiness. In addition to a higher credit line, cardholders get perks like 2% to 10% cash back at select merchants and access to its free budgeting tool, Spending Planner, via its mobile app.
The Petal 1 Visa could also be a good choice for those with a thin credit file. You could potentially qualify for this card without a credit score or credit history.
Read our full Petal 1 Visa Card review.
FIT Mastercard Credit Card
While the FIT Mastercard Credit Card starts out with a relatively small credit line of $400, that amount could double to $800 after you make six on-time minimum monthly payments. You also get access to your Vantage 3.0 score from Experian for free if you sign up for e-statements.
This card does have an annual fee of $99 (plus a one-time processing fee of $89.00 and a monthly maintenance fee of $75, billed at $6.25 per month (monthly maintenance fee not billed for first 12 months)).
You don't have to worry about your credit score being impacted just to find out if you might qualify for the Destiny Mastercard. With Destiny, you can prequalify without it affecting your score. Your payments will also be reported to all three credit bureaus, which could help you build or rebuild your credit over time.
This card does have an annual fee that could be up to $99 (varies depending on which card you qualify for: either $59 per year or $75 the first year, then $99 after)
Why we picked these particular cards
We chose these credit cards based on their fees and features, as well as the ability to provide for a range of poor credit experiences.
If your credit file is thin because you’re young and a student, the Petal 1 Visa Card could make sense for you. However, the Credit One, FIT, and Destiny cards are available for those with particularly poor credit, and many people could potentially qualify (although in extreme cases, you might be rejected).
All four of these cards report to the major credit bureaus — Equifax, Experian, and Transunion. Your payment history will show up on your credit report, which could help you improve your credit score over time.
Frequently asked questions
Can I get an unsecured credit card with a 500 credit score?
Although a credit score of 500 or lower can lessen your unsecured credit card choices, you might still have options. Some card issuers offer unsecured card products specifically designed for individuals with poor credit or a lean credit profile. However, unsecured credit cards for poor credit typically offer a low credit line, and might charge high fees and high interest rates.
What credit card can you get after bankruptcy?
When your credit is recovering from bankruptcy, getting approved for a credit card can be challenging. There are many secured credit card options. These will require you to supply a refundable security deposit that will typically be the equivalent of the credit limit for the card. Check out our list of the best secured credit cards for some options.
Are there credit cards for bad credit with no deposit and instant approval?
There are indeed no-deposit credit card products available for applicants with bad credit. These products are called unsecured credit cards and don’t require a cash deposit. However, whether and how quickly you’re approved for the card will depend on each credit card company's underwriting criteria.
What's the easiest unsecured credit card to get approved for?
If you’re a student who’s looking to build your credit, the Petal 1 Visa Card might be a good option. With a $0 annual fee, and the ability to earn 2% to 10% cash back at select merchants, it’s a starter card that pays.
Other potential options include:
- Credit One Bank Platinum Visa For Rebuilding Credit
- Destiny Mastercard
- FIT Mastercard Credit Card
- Indigo Platinum Mastercard
- TOTAL Visa Credit Card
How does an unsecured credit card help me rebuild my credit?
As you make on-time payments toward your unsecured credit card, your credit card issuer will report the account’s status and payment history to the credit bureaus. Over time, the data from your responsible credit card borrowing habits are used to calculate your credit score. Factors like a good debt utilization ratio (i.e. how much credit you’ve used compared to your accessible credit line) and consistent, on-time payments are positive signals to credit bureaus.
Will applying for a credit card hurt your credit score?
Some credit cards, especially secured cards, have a prequalification process that allows you to see if you could potentially qualify for a particular card. This process typically involves a soft credit pull, which won't impact your credit score.
However, when you apply for a new credit card, lenders will generally run a hard credit check as part of the application process, which might cause your FICO score to dip by a few points. If you're approved for the card, other factors like late payments could negatively impact your score.
However, if you pay off your full balance each month and make your monthly payments on time, your credit score could potentially increase over time.
Remember: Using your credit cards responsibly is important
As you build or rebuild your credit, it’s vital to be careful about how you use your cards. Consider making a budget and only making purchases that you can pay off immediately. This will help you build credit without paying interest or getting in over your head with debt.
It’s possible to come back from poor credit. I know. I made my own personal finance mistakes, but I was able to recover and get credit cards later. You can even get a credit card after bankruptcy. If you approach the situation with a plan and work to get out of debt, you can fix your credit and apply for even better cards down the road.
Build Credit & Earn Cash Back
Secured Sable ONE Credit Card
Secured Sable ONE Credit Card
Dollar-for-dollar match of the cash back you earn during your first year
2% cash back on purchases at Amazon, Uber, Uber Eats, Whole Foods, Netflix, Spotify, and more; plus, 1% cash back on all other purchases
- 2% cash back at Amazon, Uber, Uber Eats, Whole Foods, Netflix, Spotify, and more
- 1% cash back on all other purchases
- Dollar-for-dollar match on cash back earned in year one
- Clear pathway to getting an unsecured credit card
- No late fees and no annual fee
- No intro APR promotion offered
- Requires a deposit
- Dollar-for-dollar match of the cash back you earn during your first year
- 2% cash back on purchases at Amazon, Uber, Uber Eats, Whole Foods, Netflix, Spotify, and more; plus, 1% cash back on all other purchases