You can get a credit card with bad credit, but your options are narrower and the terms will be less favorable than what people with good credit receive.
Banks and card issuers see bad credit as a sign that you have missed payments, carried high balances, or defaulted on past debts. They respond by offering cards with higher interest rates, lower credit limits, and annual fees. The tradeoff is real: you pay more to borrow. But the card itself is available to you, and using it responsibly is one of the fastest ways to rebuild your credit score.
The most common path is a secured credit card, which requires you to put down a cash deposit that becomes your credit limit. You then use the card like any other card, and your on-time payments get reported to the three credit bureaus. After six to eighteen months of perfect payment history, many issuers will convert your account to an unsecured card and return your deposit.
Key Takeaways
- Secured credit cards require a cash deposit but are designed specifically for people rebuilding credit and report to all three credit bureaus.
- Unsecured cards for bad credit exist but come with higher interest rates and annual fees; read the full terms before applying.
- Your credit limit on a secured card is usually equal to your deposit, so a $500 deposit gives you a $500 limit.
- On-time payments are what rebuild your score, so choose a card you can afford to use and pay off on time every month.
- Avoid cards that charge upfront fees just to open the account; legitimate issuers charge annual fees only after approval.
Secured Cards: The Most Straightforward Route
A secured card works like this: you deposit money into a savings account held by the card issuer. That deposit becomes your credit limit. You receive a physical card and can charge purchases up to that limit. You then make monthly payments just like you would with any credit card. The issuer reports your payment history to Equifax, Experian, and TransUnion.
The deposit stays in the bank's account and earns a small amount of interest (usually less than 1 percent annually). You cannot touch it while the account is open, but you get it back when you close the card or when the issuer converts it to an unsecured card. The interest rate on purchases is typically between 18 and 24 percent, which is high but not unusual for bad-credit cards.
Banks that offer secured cards include Capital One, Discover, and U.S. Bank. Each has slightly different requirements for the deposit amount (usually between $200 and $2,500) and different terms. Compare the annual fee, the interest rate, and whether the issuer reports to all three bureaus before you choose.
Unsecured Cards for Bad Credit: Higher Cost, No Deposit
Some issuers offer unsecured cards to people with bad credit—cards that do not require a deposit. The catch is that they charge higher interest rates (often 24 to 36 percent) and almost always charge an annual fee ($39 to $99 per year). Some also charge a one-time processing fee when you open the account.
These cards can make sense if you cannot afford to put down a deposit right now, but do the math first. On a $500 balance at 29 percent interest with a $95 annual fee, you will pay roughly $240 in interest and fees over a year. A secured card with the same balance at 20 percent interest and a $0 annual fee costs you about $100. The difference matters.
Read the full disclosure document before you commit. Look for the APR (annual percentage rate), the annual fee, any other fees, and the credit limit you will receive. If the card charges a fee just to open the account before you are approved, that is a red flag—legitimate issuers charge annual fees only after you have been approved and the account is open.
What Happens During the Application Process
When you submit an application for a secured or unsecured card, the issuer will run a hard inquiry on your credit report. This is a formal check that temporarily lowers your credit score by a few points. Multiple applications in a short time can add up, so space them out by at least a few weeks if you are considering more than one card.
The issuer will also verify your income, usually by asking for a recent pay stub or tax return. They want to know that you can afford to make at least the minimum payment each month. If you are unemployed or have very low income, some issuers will still approve you but may offer a lower credit limit.
Approval decisions usually come within a few days to a week. If you are approved, the issuer will tell you the credit limit, the interest rate, and the annual fee. If you are denied, you have the right to know why—the issuer must send you a written explanation. Common reasons include too many recent hard inquiries, too much existing debt, or a very recent bankruptcy or default.
How to Use Your Card to Rebuild Credit
Getting the card is only the first step. What matters for your credit score is what you do with it after approval. The three things that move your score the most are payment history (35 percent of your score), credit utilization (30 percent), and length of credit history (15 percent).
Make a small purchase each month—a gas fill-up, a coffee, something you would buy anyway—and pay the full balance before the due date. This shows the bureaus that you can borrow and repay reliably. Do not carry a balance to pay interest; that costs you money and does not help your score any faster. Keep your balance below 30 percent of your credit limit; if your limit is $500, try to keep your balance under $150.
After six to eighteen months of on-time payments, your score will improve noticeably. At that point, you may see offers for unsecured cards with better terms, or your issuer may convert your secured card to unsecured and return your deposit. Do not close the card once it converts—keeping old accounts open helps your credit history length.
Alternatives If You Cannot Get Approved
If you are denied for both secured and unsecured cards, you have other options. A credit builder loan works differently: you borrow a small amount (usually $300 to $1,000) and the lender holds the money in a savings account. You make monthly payments, and after you repay the loan in full, you get the money back. Credit unions often offer these at lower interest rates than banks.
You can also ask to be added as an authorized user on someone else's credit card account—usually a family member with good credit. Their payment history will be added to your credit report, which can boost your score. You do not need to use the card or even receive a physical card; the account holder just needs to add your name.
A third option is a secured credit builder card from some credit unions, which combines features of both a secured card and a credit builder loan. You deposit money, use the card, and make payments, but the terms are often more flexible than bank cards.
Red Flags to Avoid
Some companies prey on people with bad credit by charging high upfront fees or making false promises. Avoid any card that charges a fee to open the account before you are approved. Avoid cards that promise to "fix" your credit or may provide approval—no one can may provide that, and anyone who claims they can is lying.
Be wary of cards that charge a fee just to check if you are may be able to access. Legitimate issuers let you check your may be able to access for free, usually through their website, and a soft inquiry does not hurt your credit score. If a company asks for money upfront, walk away.
Also watch out for cards that charge a monthly fee just to hold the account, separate from the annual fee. Some cards charge $5 to $10 per month for account maintenance. Over a year, that adds up to $60 to $120 on top of the annual fee. Compare the total cost before you apply.
Frequently Asked Questions
How much of a deposit do I need for a secured card?
Most secured cards require a minimum deposit of $200 to $500, though some accept deposits as low as $200 and others require $2,500 or more. Your deposit becomes your credit limit, so a $500 deposit gives you a $500 limit. Check the issuer's website for their specific minimum before you apply.
Will a secured card hurt my credit score?
The hard inquiry when you apply will lower your score by a few points temporarily. But once the account is open and you make on-time payments, your score will start to improve. After six to twelve months of perfect payment history, the improvement usually outweighs the initial dip.
Can I use a secured card just like a regular card?
Yes. You swipe it, tap it, or use it online exactly like any other credit card. The only difference is that your credit limit is equal to your deposit. Once you have made on-time payments for a year or more, many issuers will convert it to an unsecured card and return your deposit.
What if I have had a bankruptcy or foreclosure recently?
You can still get a secured card, but you may need to wait a few months after the bankruptcy or foreclosure is finalized. Some issuers have waiting periods of six months to a year. A secured card is actually one of the fastest ways to rebuild after bankruptcy because it is designed for people in your situation.
Should I apply for multiple cards at once to increase my chances?
No. Each application triggers a hard inquiry, which lowers your score. Multiple inquiries in a short time can signal to issuers that you are desperate for credit, which makes them less likely to approve you. Apply for one card, wait a few weeks, and then apply for another if you need to.