It can be difficult to get a new credit card if you have bad credit. Likewise, it can be hard to improve your credit score if you are not using the credit you have responsibly. This doesn’t mean you are out of options. If you have poor credit and would like to fix it, then perhaps you should check out one of the three credit card options in this piece.
Secured credit cards are a great option
There are credit cards known as secured cards that are easier to apply for and enable you to improve your credit score. Most credit cards are unsecured, which means they are not backed by collateral of any kind. This means the lender is trusting you to use the credit for whatever you want, but expecting that you pay it back.
“Responsible credit spending is a great way to boost your credit score.”
While unsecured credit cards are the norm and make it easy for consumers to purchase what they need with little questions asked – which is especially helpful in emergencies – secured credit cards have more restrictions. Specifically, secured credit cards require you to put down a cash collateral deposit. According to Bankrate, the amount you put down as collateral becomes the limit on your card. This way, the lender already has your money and can feel confident in allowing you to use to the card.
And if you are thinking to yourself, “That just sounds like a debit card,” it is important to note that this card is still treated as credit, and you will still have to pay down your monthly balance, which will help boost your credit score. After you have proven that you can spend responsibly and the lender feels the deposit is no longer necessary, then you may be able to move to a more standard unsecured credit card.
But there are many types of credit cards, both secured and unsecured. And when you have poor credit, you’ll definitely want one that will benefit you the most in terms of annual fees, interest rates and point-earning. Here are a few of the top rated credit cards for poor credit in 2015:
Capital One Secured MasterCard
While this card is secured, it doesn’t require you to make your deposit right away, according to NerdWallet. You have 80 days to put down your deposit from the time you open your account. This can be helpful if you need a credit line right away but don’t have the cash to back it. This card also allows you to earn a higher credit line over time without putting down an additional deposit.
There is a drawback to this card, and that is its interest rate. It is true that it can vary slightly, but the average APR is 24.9 percent. Additionally, this card doesn’t have any type of reward program affiliated with it. Even so, the benefits of this card make it attainable and will certainly help you out when you need it.
First PREMIER Bank MasterCard Credit card
This card is unsecured, which means you don’t have to give up any cash when applying. Additionally, Credit Karma noted this card has no interest as long as you make your payments in full each month. This can be a great incentive to only purchase what you can afford each month and pay it off by the due date. Additionally, this will aid in bumping up your credit score.
However, if you don’t make payments on time then the interest tacked on can be pretty steep. Likewise, there is a one-time processing fee as well as additional fees that will be billed to the card. If you are considering this card, make sure you speak to your lender about what sort of fees you’ll incur from month to month. Knowing before signing off on the card is the first step to building responsible credit.
Credit One Bank Credit Card with Gas Rewards
According to the Simple Dollar, this is a great card for those with poor credit. It is unsecured, so you won’t have to pay the deposit up front. It is also one of the only cards geared toward consumers with injured credit that has a reward program. In this instance, you will receive 1 percent back on all gas purchases. If you are regularly in the car and also looking to build your credit, then this could be the card for you.
Like all cards, you should speak to your lender before applying. Make sure you know exactly what fees and rates are affiliated with the card before signing up.
Getting a credit card that will help you manage your spending is a great way to build your credit score while also teaching yourself some spending responsibility. There are all kinds of different cards with different benefits, and some may help you more than others. Take your time, check your options and get a card that will work for you.