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If you’re trying to get your finances back on track, applying for a bad credit credit card is key to achieving this goal. As you probably know, none of these are the best credit cards on the market — in fact, many don’t even offer rewards. But opting for a secured credit card is still the way to go because it will help you rebuild your credit score.
Not sure how, or which one is right for you? Check out the details below for all the information you need about secured credit cards for people with bad credit.
Why choose a secured credit card?
If your goal is to rebuild your credit score, choosing a secured credit card over a prepaid debit card is a wise move. Here’s why: Secured cards require you to tap a credit line and build up a small amount of short-term debt when you make your purchases. By repaying them on time and in full each month, you’ll be creating a track record of responsible credit use.
In time, this will help your credit score improve. But with a prepaid debit card, you’re simply using the funds you’ve loaded onto the plastic – there’s no credit line involved. As a result, your credit score won’t be affected.
The key takeaway here is that as soon as you can get together the funds to put down a deposit on a secured card, you should apply for one of the products below. Otherwise, your credit will stay stuck in the doldrums.
Best secured credit cards for bad credit consumers
Secured credit cards have a somewhat dodgy reputation because many of them charge high interest and fees. While none of the rates on the cards we’ve chosen are low, you can avoid them altogether by paying your bill in full each month. Given this, we based our choices mostly on fees and other card attributes.
Here are our top picks in secured credit cards:
Wells Fargo Secured Visa Card
on Wells Fargo’s
secure website
With the Wells Fargo Secured Visa Card, you’ll have the opportunity get a credit line of $300-$10,000, depending on the amount of your up-front deposit. Although those funds will be held in an account that doesn’t earn interest, you’ll have the opportunity to get them back if you use your card responsibly.
We like this card because its annual fee and interest rate are low compared with other secured cards. The annual fee is $25. The ongoing APR is 18.99%.
Another thing we like about this card is that Wells Fargo will regularly review your account and credit profile and may upgrade you to an unsecured card when they like what they see. This is one of the benefits of getting a secured card from a major issuer.
US Bank Secured Card
on US Bank’s
secure website
The US Bank Secured Card is another good pick among secured cards. The credit limit you can get with the card ranges from $300-$5,000, depending on the amount of your deposit. But the good news is that your deposit will be housed in an interest-bearing account with US Bank until you’re ready to upgrade to an unsecured card.
Speaking of moving from secured to unsecured, US Bank will review your account information and history after 12 months. If you’ve been diligent in using the card, making your payments on time and staying out of debt, it’s likely you’ll be on the unsecured path in no time.
The US Bank Secured Card’s annual fee is $35. The ongoing APR is 20.99%, but again, you can avoid this by paying in full each month.
UNITY® Visa Secured Credit Card – The Comeback Card™
on One United Bank’s
secure website
Last but not least, the UNITY® Visa Secured Credit Card – The Comeback Card™ is another secured card to consider. Its interest rate is the lowest of the bunch at9.95% on balance transfers for 6 months, and then the ongoing APR of 17.99% (Fixed). Although it charges a slightly higher annual fee than our other two picks,$39 certainly isn’t exorbitant.
You can get a credit line of $250-$10,000 with this card, and again, this depends on your initial deposit.
The only slight drawback to this card is that the path to getting an unsecured card is somewhat unclear. After 6-12 months of responsible use, you might have to apply for an unsecured card with another issuer – the option to upgrade directly with OneUnited Bank doesn’t seem to be available. But since reports about your activity with the UNITY® Visa Secured Credit Card – The Comeback Card™ will be made to all 3 credit bureaus, your good credit habits should eventually make getting a regular card relatively easy.
Other tips for rebuilding credit
In addition to getting a secured credit card and using it regularly, follow the Nerds’ top tips below to rebuild your credit:
- Pay your bills on time, every time.
- If you can, make multiple payments on your credit card throughout the month so that your credit utilization stays low.
- Don’t apply for any additional credit cards – for right now, your focus should be on making timely, in-full payments on your secured card.
- Check your three credit reports once per year. If you spot an error, take steps to have it corrected.
Happy swiping!
Source:www.nerdwallet.com