Forbes Advisor analyzed dozens of credit cards marketed toward subprime borrowers. Factors taken into consideration for each category included the annual fee, any monthly fees, security deposit requirements, annual percentage rate (APR) and other extras or benefits that come with card ownership.
Can you get a credit card after bankruptcy?
Yes, you can still get a credit card after bankruptcy, although the options might be limited and you’ll have to wait until the bankruptcy is discharged, or settled. If you filed for a Chapter 7 bankruptcy, which is when you sell eligible assets to pay off as much of your debt as you can, it will typically take about three months. If you file for Chapter 13 bankruptcy, this can take several years as you’ll be paying back a portion of your debts to your creditors.
Know that after bankruptcy, it will take some time to build your credit and the cards available to you may come with higher-than-average annual and interest fees. Look for a card with minimal fees that reports to all three credit bureaus.
What does “bad credit” mean in terms of credit cards?
While there’s no exact number that counts as the threshold between “bad” and “good” credit, generally a FICO score below 580 is considered very poor and between 580 and 669 is generally considered fair.
The lower your credit score, the more limited your options when it comes to credit cards. Someone with bad credit will typically only be able to get approved for a secured card or a card with higher-than-average interest rates and other additional fees.
Can I get a credit card if I have bad credit?
You can get a credit card with bad credit but your choices will be limited to either a secured credit card or one of a small handful of unsecured credit cards available to those with bad credit.
If you do choose one of these options, a worthy goal is to use the card to help build your credit so you can eventually qualify for a card with better rewards and perks.
Is a secured credit card my only option if I have bad credit?
There are a few unsecured credit cards available to those with bad credit, but they typically carry exorbitant fees and a sky-high APR. If you are opposed to putting down a security deposit, be aware of these extra costs involved with unsecured cards for those with bad credit.
The only way to improve your credit so that you qualify for better options is to demonstrate consistent on-time payment behavior so choose a card that reports to at least one of the three major credit bureaus: Equifax, Experian and TransUnion.
What should I look for in a credit card for bad credit?
If you have bad credit, getting a credit card can be an opportunity to improve your credit profile. Here’s what to look for:
• Reporting on-time payment behavior. You should choose a card that reports to at least one of the three major credit bureaus: Equifax, Experian and TransUnion. Over time, consistent payments will show up on your credit report and can help improve your credit standing. It’s even better if you choose a card that reports to all three credit bureaus.
• Light on fees. Most cards for bad credit come with punishing fees like sky-high annual fees that can eat away at your credit limit, account opening fees or even fees for requesting a higher credit limit. Aim for a card that seeks to minimize your out-of-pocket costs just owning it.
• Ability to upgrade. Some cards will allow you to “graduate” to an unsecured card after several months of good payment behavior. This can be beneficial since you won’t have to open another account once your credit has improved. Opening and closing new credit lines can have a negative effect on your score and undo some of your hard work.
Can you do a balance transfer with bad credit?
If you’re applying for a card with a 0% APR balance transfer offer or a lower interest rate than your current card has, it will be challenging to qualify with bad credit. Typically, these types of cards are available to those with the best credit.
When an issuer allows a cardholder to transfer a balance from another bank, it’s a way for them to take on new customers. But an issuer takes a risk on anyone they extend a line of credit to. If your credit score deems you too risky to an issuer, you aren’t likely to be approved for a balance transfer.
If you’re looking for help taming a high-interest credit card balance and your credit doesn’t qualify you to transfer your balance to another card, consider a personal loan, which may have more favorable rates. Or, speak to a credit counselor who might be able help you work through options to help improve your credit and pay down your debt.