These 7 best credit cards for bad credit are the superheroes of the banking world, say industry experts, providing low fees and sane rates to people trying to build or repair their credit.
1. Orchard Bank credit card
Orchard Bank, part of megabank HSBC, offers three credit cards plus a secured card for consumers needing to rebuild their credit. You simply apply and the bank decides which card you qualify for based on your credit worthiness.
The unsecured cards come with annual fees ranging from $39 to $59, depending on credit history, and APRs range from 14.9% to 19.9%, also based on your credit.
To put that in perspective, a credit card like the Applied Bank Unsecured Visa Gold - which also targets consumers with poor credit -- comes with a 29.99% APR for all customers.
If your credit history is really bad, you will likely end up with a secured card. These work like a regular credit card, but you put down a deposit of your own money. (That's why their interest rates are typically lower than those of regular unsecured credit cards.)
But even if you only qualify for a secured Orchard Bank card, it isn't a rotten deal. You have to make a $200 minimum security deposit - which is refundable and typical for secured cards -- but the APR is a low 7.90% and the annual fee is $35 and is waived the first year.
"I like these [Orchard Bank] cards because let's say you're on the bubble between bad and poor credit, you might be able to get a better deal with one of these cards," said Beverly Harzog, credit card expert at Credit.com. "Even if you do have really bad credit, this is one of the easiest unsecured cards to get, and if you don't qualify then see if you like the terms of the secured card."
2. Capital One Secured MasterCard
The annual fee on this secured card is a reasonable $29, and while most secured cards require security deposits of around $250, you can deposit as little as $49 and still get a credit line of $200. If you deposit more -- like $99 or $200 -- you can increase your credit line up to $3,000.
"It's more of a secured card than an unsecured card, but it's both, which is very nice," said Curtis Arnold, founder of CardRatings.com. "And some people just don't have 200 bucks to put down as a deposit, so only having to put $49 down is great."
In addition, there are no foreign transaction fees - which is true for all of the bank's debit and credit cards. And the card reports to the three major credit bureaus.
But if you carry this card you should vow never, ever to carry a balance because the APR is a high 22.9%.
3. Navy Federal 'n Rewards Secured Card
If you have a military connection, the Navy Federal Secured Card is one of the best options for people with poor credit.
The card, issued by Navy Federal Credit Union, comes with an APR as low as 8.99% and no annual fee. Cardholders also earn a point for every dollar they spend, which they can then redeem on merchandise or gift cards.
The card reports to the three main credit bureaus, and after 12 months, you can be switched to an unsecured card.
"I realize not everyone can apply for this, but the terms are really good and there are a lot of people who have military ties and can become a member of NFCU," said John Ulzheimer, personal finance expert at SmartCredit.com.
4. Citi Secured MasterCard
While most secured cards require you to make a deposit that the issuers hold onto in a no-interest savings account, the Citi Secured MasterCard invests your deposit in CDs. Plus, there's a pretty low $29 annual fee and no monthly maintenance fees.
There is, however, an 18.24% APR. So if you plan to carry a balance, choose another card with a lower APR.
"Normally I would never recommend a card with an interest rate that high, but if someone is using it to just rebuild credit and not carrying a balance, you get to invest your money in a CD so you're getting something back," said Beverly Harzog, credit card expert at Credit.com.
In addition, while you could be stuck with other secured cards for years, Citi will consider graduating you to a better, unsecured card after 18 months.
5. Mango Prepaid MasterCard
Personal finance experts typically warn consumers against prepaid cards because of their unreasonably high fees. But the Mango Prepaid MasterCard is one of the exceptions, carrying some of the lowest fees in the industry.
While secured cards typically require you to put down a refundable deposit to use the card like a credit card, prepaid cards are simply loaded with your own money. You don't pay interest on these cards, but they also don't report to credit bureaus.
That means prepaid cards are best for consumers who aren't necessarily concerned about building their credit.
"Prepaid cards are good for someone who has no bank account, doesn't have money for a deposit, or isn't ready for a credit card," said Beverly Harzog, credit card expert at Credit.com. "It's important not to step back into the credit card game if you're not ready to control your spending."
Unlike most prepaid cards, the Mango card doesn't have an activation fee, and the card actually comes with a $20 signup bonus when you enroll in free direct deposit. There's no charge for customer service calls, and it's free to load your card with money from your bank account.
Compare that to a prepaid card like the BabyPhat Rush Card, which costs $14.95 just to own and charges $9.95 per month, along with $1 per transaction depending on the plan you choose.
But ATM-frequenters, beware: Like most prepaid cards, the Mango card charges you $2 for ATM withdrawals, and it costs you 50 cents to check your balance.
6. Capital One Cash Rewards for Newcomers
This is a credit card aimed at people who are new to the U.S., but anyone looking to build their credit can apply and be approved for the card.
While the APR is a relatively high 24.9%, there's no annual fee, no foreign transaction fee, and the card offers 2% cash back on travel purchases and 1% cash back on all other purchases.
You can get that cash back any time, as an account credit or check - or you can set up automatic redemption. The card also reports to the three major credit bureaus.
"If someone is new to the States, understands how credit works here and knows not to carry a balance, this could help them establish credit and they could get cashback rewards at the same time -- which is rare for a card like this," said Beverly Harzog, credit card expert at Credit.com.
7. Open Sky Secured Visa Card
The Open Sky Secured Visa Card boasts a low interest rate and requires a typical deposit of $200 to get a credit line of up to $3,000.
The APR on the card is 9.75%, which is pretty much as good as it gets for consumers with lousy credit. In fact, the average APR on a typical unsecured credit card is just above 14%, according to LowCards.com.
The issuer, Public Savings, says it will accept anyone -- there's no credit check for approval. Plus, they report to all three major credit bureaus to help you build your credit.
The one drawback: an annual fee of $50. But this is one of the only fees cardholders will be hit with. Another is the $25 charge to increase or decrease your credit limit after a year, but this can be avoided if you plan ahead and get the credit limit you need when you sign up.
"So many other cards nail you with tons of extra fees that you don't even know about, but this one is really just that $50 right up front," said Bill Hardekopf, credit card expert and CEO of LowCards.com.
1. Orchard Bank credit card
Orchard Bank, part of megabank HSBC, offers three credit cards plus a secured card for consumers needing to rebuild their credit. You simply apply and the bank decides which card you qualify for based on your credit worthiness.
The unsecured cards come with annual fees ranging from $39 to $59, depending on credit history, and APRs range from 14.9% to 19.9%, also based on your credit.
To put that in perspective, a credit card like the Applied Bank Unsecured Visa Gold - which also targets consumers with poor credit -- comes with a 29.99% APR for all customers.
If your credit history is really bad, you will likely end up with a secured card. These work like a regular credit card, but you put down a deposit of your own money. (That's why their interest rates are typically lower than those of regular unsecured credit cards.)
But even if you only qualify for a secured Orchard Bank card, it isn't a rotten deal. You have to make a $200 minimum security deposit - which is refundable and typical for secured cards -- but the APR is a low 7.90% and the annual fee is $35 and is waived the first year.
"I like these [Orchard Bank] cards because let's say you're on the bubble between bad and poor credit, you might be able to get a better deal with one of these cards," said Beverly Harzog, credit card expert at Credit.com. "Even if you do have really bad credit, this is one of the easiest unsecured cards to get, and if you don't qualify then see if you like the terms of the secured card."
2. Capital One Secured MasterCard
The annual fee on this secured card is a reasonable $29, and while most secured cards require security deposits of around $250, you can deposit as little as $49 and still get a credit line of $200. If you deposit more -- like $99 or $200 -- you can increase your credit line up to $3,000.
"It's more of a secured card than an unsecured card, but it's both, which is very nice," said Curtis Arnold, founder of CardRatings.com. "And some people just don't have 200 bucks to put down as a deposit, so only having to put $49 down is great."
In addition, there are no foreign transaction fees - which is true for all of the bank's debit and credit cards. And the card reports to the three major credit bureaus.
But if you carry this card you should vow never, ever to carry a balance because the APR is a high 22.9%.
3. Navy Federal 'n Rewards Secured Card
If you have a military connection, the Navy Federal Secured Card is one of the best options for people with poor credit.
The card, issued by Navy Federal Credit Union, comes with an APR as low as 8.99% and no annual fee. Cardholders also earn a point for every dollar they spend, which they can then redeem on merchandise or gift cards.
The card reports to the three main credit bureaus, and after 12 months, you can be switched to an unsecured card.
"I realize not everyone can apply for this, but the terms are really good and there are a lot of people who have military ties and can become a member of NFCU," said John Ulzheimer, personal finance expert at SmartCredit.com.
4. Citi Secured MasterCard
While most secured cards require you to make a deposit that the issuers hold onto in a no-interest savings account, the Citi Secured MasterCard invests your deposit in CDs. Plus, there's a pretty low $29 annual fee and no monthly maintenance fees.
There is, however, an 18.24% APR. So if you plan to carry a balance, choose another card with a lower APR.
"Normally I would never recommend a card with an interest rate that high, but if someone is using it to just rebuild credit and not carrying a balance, you get to invest your money in a CD so you're getting something back," said Beverly Harzog, credit card expert at Credit.com.
In addition, while you could be stuck with other secured cards for years, Citi will consider graduating you to a better, unsecured card after 18 months.
5. Mango Prepaid MasterCard
Personal finance experts typically warn consumers against prepaid cards because of their unreasonably high fees. But the Mango Prepaid MasterCard is one of the exceptions, carrying some of the lowest fees in the industry.
While secured cards typically require you to put down a refundable deposit to use the card like a credit card, prepaid cards are simply loaded with your own money. You don't pay interest on these cards, but they also don't report to credit bureaus.
That means prepaid cards are best for consumers who aren't necessarily concerned about building their credit.
"Prepaid cards are good for someone who has no bank account, doesn't have money for a deposit, or isn't ready for a credit card," said Beverly Harzog, credit card expert at Credit.com. "It's important not to step back into the credit card game if you're not ready to control your spending."
Unlike most prepaid cards, the Mango card doesn't have an activation fee, and the card actually comes with a $20 signup bonus when you enroll in free direct deposit. There's no charge for customer service calls, and it's free to load your card with money from your bank account.
Compare that to a prepaid card like the BabyPhat Rush Card, which costs $14.95 just to own and charges $9.95 per month, along with $1 per transaction depending on the plan you choose.
But ATM-frequenters, beware: Like most prepaid cards, the Mango card charges you $2 for ATM withdrawals, and it costs you 50 cents to check your balance.
6. Capital One Cash Rewards for Newcomers
This is a credit card aimed at people who are new to the U.S., but anyone looking to build their credit can apply and be approved for the card.
While the APR is a relatively high 24.9%, there's no annual fee, no foreign transaction fee, and the card offers 2% cash back on travel purchases and 1% cash back on all other purchases.
You can get that cash back any time, as an account credit or check - or you can set up automatic redemption. The card also reports to the three major credit bureaus.
"If someone is new to the States, understands how credit works here and knows not to carry a balance, this could help them establish credit and they could get cashback rewards at the same time -- which is rare for a card like this," said Beverly Harzog, credit card expert at Credit.com.
7. Open Sky Secured Visa Card
The Open Sky Secured Visa Card boasts a low interest rate and requires a typical deposit of $200 to get a credit line of up to $3,000.
The APR on the card is 9.75%, which is pretty much as good as it gets for consumers with lousy credit. In fact, the average APR on a typical unsecured credit card is just above 14%, according to LowCards.com.
The issuer, Public Savings, says it will accept anyone -- there's no credit check for approval. Plus, they report to all three major credit bureaus to help you build your credit.
The one drawback: an annual fee of $50. But this is one of the only fees cardholders will be hit with. Another is the $25 charge to increase or decrease your credit limit after a year, but this can be avoided if you plan ahead and get the credit limit you need when you sign up.
"So many other cards nail you with tons of extra fees that you don't even know about, but this one is really just that $50 right up front," said Bill Hardekopf, credit card expert and CEO of LowCards.com.
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