A looming financial doom is never a thing of the past. It can come to anyone. A bad decision, a dramatic life-altering event like the loss of a job or simply mismanagement of finances can be the reason for financial doom. That doesn’t, however, mean that you cannot get hold of a credit card. A credit card often plays an instrumental role in fixing a bad credit score. So, if you are plagued with the problem of bad credit, get a credit card and rebuild your credit score. In this article, we are going to list some of the best credit cards for bad credit.
Yes, you read it right. There are many financial companies out there that offer credit cards to people with poor credit ratings. In this article, we will do a comparative study and then try to understand what APR is.
Ready? Let us start!
Comparison of Best Credit Cards for Bad Credit:
|Credit Card||OTF*||Regular APR**||Annual Fee||Monthly Fee||Rewards Rate||Minimum Credit|
|Credit One Bank Platinum Visa for Rebuilding Credit||None||19.74% to 25.74% (V)||$0 to $99||None||0% to 1% cashback||Bad|
|†Capital One Secured MasterCard||None||24.99% (V)||$0||None||—||Limited History|
|†Discover it Secured||None||24.99% (V)||$0||None||1% to 2% cashback||Limited History|
|†OpenSky Secured Visa Credit Card||None||19.14% (V)||$35||None||—||Limited History|
|†USAA Secured Card American Express Card||None||11.65% to 21.65% (V)||$35||None||—||Limited History|
|Total VISA Credit Card||$89||29.99%||For the first year $75. After that, $48 per year||For the first year no monthly fee. After that, $6.25 per month||—||Bad|
|Milestone MasterCard – Bad Credit Considered||None||23.9%||$35 to $99||None||—||Bad|
|Official NASCAR Credit Card from Credit One Bank||None||19.74% to 25.74% (V)||$0 to $99||None||1% to 2% cashback||Bad|
|First Access VISA Credit Card||$89||29.99%||For the first year $75. After that, $48 per year||For the first year no monthly fee. After that, $6.25 per month||—||Bad|
|Indigo MasterCard for Less than Perfect Credit||None||23.9%||$0 to $99||None||—||Bad|
OTF* is One-Time Fee
Regular APR** is regular Annual Percentage Rate
† It is a secured MasterCard, which means, there will be a security deposit that you need to pay. The minimum deposit that you need to make for different secured credit cards mentioned in the table above are given below:
- For Capital One Secured MasterCard, you make a minimum deposit of $49, or $99, or $200.
- For Discover it Secured, the minimum deposit you need to make is $200.
- For OpenSky Secured Visa Credit Card, the minimum deposit you need to make is $200.
- For USAA Secured Card American Express Card, the minimum deposit you need to make is $250.
Tips for Choosing Best Credit Cards for Bad Credit
Just because some financial organizations are offering credit cards for bad credit, it does not mean that you will get a credit card or if you qualify, you should pick up any card that comes across you. Here are a few tips that you should always keep in mind when you shop for the best credit cards for bad credit:
Tip 1: Ensure that all your bills are up-to-date. Though these companies offer credit cards to improve your credit score, some creditors will not approve your credit card application if your bills are not up-to-date. They will not want to add to your obligations.
Tip 2: Try to get secured cards. The reason for this tip is simple. Though secured cards require you to make a minimum deposit, they remain the cheapest. They are cheap because secured cards do not charge An interest annual fee and usually their APR is low. There is a reason for low APR on secured cards. Your security deposits will act as your credit line.
Tip 3: Compare credit cards before you pick one. Different cards have different rates (monthly charge, annual charge, APR, etc.). Pick the one that suits you the most. There is no point picking up a credit card that will charge you high, and eventually, your obligations will keep building.
Tip 4: Remember that a secured card provider never guarantees approval of your application. If you have recent delinquency or if you have a tax lien, card providers will decline your request even if you agree on making a security deposit. Yes, some creditors will check your credit history. OpenSky Secured Visa Credit Card doesn’t conduct any credit checks, and hence, it might be the one that you may opt for in case you don’t want a credit check.
Tip 5: Every credit card provider offers something called a grace period. The grace period is an interest-free time. If you pay within this time, you will not have to pay any interest. So, try to pay off the card outstanding within the grace period.
Understanding APR for Choosing Best Credit Cards for Bad Credit
APR is not the interest rate. The interest rate is also known by the name nominal interest rate. It refers only to the interest that the creditor charges for the loan/credit card. No other expenses are taken account of while calculating the interest rate.
APR or Annual Percentage Rate in which the lender will add a margin to the U.S. Prime Rate or Prime Lending Rate.
So, APR = U.S. Prime Rate + Margin
Now, the U.S. Prime Rate is a variable. Thus, the APR also become a variable. Simply put, APR can change. However, some lenders offer a fixed APR along with a variable APR.
In the table above, you will see (V) alongside certain APRs. (V) indicates a variable APR.
Banks or other lenders will use the APR to calculate the interest that you need to pay on your outstanding balance. If the APR is too high, you will eventually be at a loss. Precisely how the banks calculate the interest is quite technical and outside the scope of this write-up, and hence, we will skip that explanation, and keep it for some other time.
Choose your credit card wisely and ensure that you don’t make a wrong judgment. Your credit score is already in bad shape. You don’t want to make it worse. After all, your financial well-being is dependent on your decisions and choices.
In case you are looking for the best credit cards for bad credit, this write-up provides a comparative study of 10 such credit cards offered by various lenders.