3 Credit Cards for Bad Credit That Actually Offer Rewards

While most credit cards for people with bad credit don't have many perks, a few provide cash back or travel rewards.

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If you have bad credit, you may think you’re automatically unqualified for credit cards that offer cash back or travel rewards. For many cards, that may be true.

But you’re not necessarily locked out of earning rewards. While most credit cards for people with bad credit don’t have many perks, a few provide cash back or travel rewards. Here are three. (Note: You should always check with the card issuers for specific terms and conditions before applying for any card.)

1. Discover it Secured

Rewards: 2% cash back on up to $1,000 spent at restaurants and gas stations, 1% cash back on all other purchases
Signup Bonus: Discover matches the cash back you earn in the first year.
Annual Fee: None
Annual Percentage Rate (APR): Variable 23.74%
Why We Picked It: This secured card offers cash back on everything, with an extra incentive for dining and gas purchases.
Benefits: Secured credit cards require a security deposit equal to your credit line. For instance, a $300 deposit lands you a $300 limit on your card. Discover’s secured card offers 2% cash back at restaurants and gas stations and 1% cash back on everything else. Plus, they’ll match the cash back you earn your first year.
Drawbacks: You’ll need an upfront security deposit of at least $200 to access this card.

2. Credit One Bank Cash Back Rewards Visa

Rewards: 1% cash back on all eligible purchases
Signup Bonus: None
Annual Fee: $0 to $75 the first year, $0 to $99 after
APR: Variable 15.65% to 24.15%
Why We Picked It: This unsecured card provides 1% cash back on all eligible purchases.
Benefits: Credit One Bank’s cash-back cards earn 1% cash back on eligible purchases, which vary based on which of their five cash back cards you qualify for. Eligible purchases may include gas, groceries, utility bills and dining.
Drawbacks: Credit One isn’t transparent on how they determine which of their cash-back cards you’ll receive, and there’s a highly variable annual fee.

3. AeroMexico Visa Secured Card

Rewards: Two miles for every dollar spent on gas and groceries, one mile for every dollar spent on everything else
Signup Bonus: 5,000 bonus miles with your first purchase and a companion flight certificate
Annual Fee: $0 the first year, $25 after
APR: Variable 23.74%
Why We Picked It: Frequent AeroMexico flyers can earn miles toward their flights.
Benefits: This secured card earns two miles per dollar spent on gas and grocery purchases and one mile per dollar spent on other purchases. Points are redeemable for AeroMexico flights. New cardholders get a bonus of 5,000 miles and a round trip flight for a companion. There’s also an annual $99 companion certificate. All flights get a complimentary checked bag.
Drawbacks: If you prefer another airline, you won’t get much mileage out of this card.

How to Choose a Rewards Card for Bad Credit

Choosing a rewards card for bad credit depends on your financial circumstances. One of the most important reasons to get a card for bad credit is to rebuild your credit, so you’ll want to choose a card that can help you do that.

Pay attention to the fees and APR associated with any card you’re considering. While a security deposit for a secured card may seem like a steep upfront expense, it might be worth it if you can avoid higher fees later.

Choose a card that rewards your spending habits and provides incentives for the types of purchases you tend to make. And make sure you’re avoiding these seven red flags as you’re deciding on a credit card for bad credit.

What Is Required to Get a Rewards Card for Bad Credit?

Many credit cards for bad credit are available to consumers with a checkered or nonexistent credit history, but that doesn’t mean you’re guaranteed to qualify. Before you apply, you should know your credit score so you can have a better idea of what cards are right for you. You can check two of your credit scores for free with Credit.com.

Image: Astarot

At publishing time, the Discover it Secured and Credit One Cash Back Rewards Visa credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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7 Red Flags to Look for When Choosing a Credit Card for Bad Credit

All credit cards are not created equal, particularly those for people with bad credit.

Digging yourself out of a bad credit situation can seem tough but there are tools to help. Credit cards are one of the chief ways to improve your credit, but they can be difficult to attain when your credit has a checkered past.

That’s not to say it’s impossible to get a secured credit card or even unsecured credit card if you have bad credit. There are cards that can help you get back on the right track, but you’ll want to watch out for problematic cards, like those that offer predatory terms and policies that can actually worsen your situation. Choosing the right credit card requires knowing what to avoid.

Here are seven red flags to look for when you evaluate credit cards for bad credit.

1. Sky-High Interest Rates

People with bad credit usually can’t qualify for the same interest rates as people with good or even fair credit. It’s the industry’s way of protecting itself against risky customers. But some cards aimed at people with bad credit charge unnecessarily high interest rates, sometimes more than twice what someone with good credit can get.

The best way to avoid sky-high interest rates is to shop around, and find the cards for bad credit that offer lower rates.

2. High Annual Fees

Some credit cards for bad credit charge no annual fee, while others charge fees, but keep them on the lower end. Then there are cards that may charge upwards of $100, which is comparable to annual fees for some rewards credit cards. As you pay down those balances, look for a card with little or no annual fees so you can put that money toward getting out of debt faster.

3. Tacked-On Fees

Some credit card issuers will tack on suspicious fees that most credit cards don’t include. These may include processing or application fees required to open your card or monthly maintenance fees that add to your annual cost.

While annual fees and late payment fees are commonplace, look out for excessive fees that would lead you to pay much more for the card than you bargained for. Make sure you understand the card’s fee structure before you apply.

4. Incomplete Credit Reporting

The purpose of these types of cards is to improve your credit. For that to happen, your credit card activity should be reported to all three major credit bureaus — Experian, Equifax and TransUnion. If your card doesn’t do that, you can’t improve your credit to its full potential.

This is why a secured credit card, which requires a security deposit, is preferable to a prepaid debit card, which does not typically affect your credit because your use of this card isn’t reported. You should make sure any card you’re considering reports to all three of the main credit bureaus.

5. High Credit Limits

High credit limits sound great. But when it comes to credit cards for bad credit, you may want to be wary. For one thing, you may have to pay a lot of fees or an excessive interest rate to access a high credit limit. For another, high credit limits can quickly spiral out of control if you have trouble managing your debt. Be wary of any card promising high credit limits out of the gate for people with bad credit.

6. A Lack of Monitoring

People with bad credit need to pay extra attention to their finances. If a card offers no way to monitor your credit progress or keep track of payments, you may want to keep looking. Opt for a card that has the option to send you an email or text alert when you have an upcoming payment so you can amp up the payment history portion of your credit profile — it counts for 35%, after all.

7. No Room for Improvement

Cards for bad credit should be designed to improve your credit and reward you for responsible behavior. If they don’t, you should look for a card that does. For instance, secured credit cards may offer the ability to earn an unsecured card after a period of responsible use and timely payments. Or, they’ll offer to raise your credit limit without requiring an additional deposit.

You can start your research on credit cards that can help to improve your credit by checking out our roundup of credit cards for bad credit. Remember, before applying, you’ll want to find out where your credit stands by reviewing your free credit reports at AnnualCreditReport.com or taking a look at two of your free credit scores on Credit.com.

Image: AntonioGuillem

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Got the Worst Credit? These Cards Can Help You Rebuild It

Sounds counterintuitive, we know, but a new credit card can help you re-establish your payment history. Just use it wisely.

Chances are, your credit isn’t actually the worst. According to data furnished to Credit.com by TransUnion, only a very tiny portion of the U.S.’s scoreable population has the lowest VantageScore possible. Of course, escaping the dreaded 300 won’t get your credit out of the woods. Any score below 600 is considered, well, bad, and even a score in the 650 to 699 range will cost you in interest.

Still, there’s no need to despair: Nothing lasts forever, including a terrible credit score. You’ve just got to take steps to rebuild it. Paying down high balances, shoring up delinquencies, paying collection accounts and disputing errors on your credit report are great places to start. (The further you get from 300, the better. You can track your progress using Credit.com’s free credit report summary.)

After that, consider getting a new credit card. It sounds counterintuitive, we know, but that plastic can be instrumental when it comes to reestablishing a solid payment history. Just be sure to pay all your bills on time and keep balances as low as possible.

Here are five cards designed to help people with bad credit rebuild their scores. (See card agreements for full terms and conditions.)

1. OpenSky Secured Visa Credit Card

Annual Fee: $35

Purchase Annual Percentage Rate (APR): Variable 18.14%

Why It’s a Good Option: Yes, secured credit cards are designed for people with bad credit, but most still require a credit check, and there’s no guarantee you’ll be approved. The OpenSky Secured Visa Credit Card foregoes pulling your credit and doesn’t require a checking account either, so if your finances are really damaged, you may want to take up their offer. OpenSky reports to all three credit bureaus, so you’re covered there. And there’s a wide range for a security deposit: You can put down as little as $200 and up to $3,000.

Beyond that, the terms of the card are decent, especially given that there’s no credit check. (There are certainly secured credit cards out there touting higher APRs and annual fees.) One drawback worth mentioning: There’s no built-in way to upgrade to an unsecured credit card, so you’ll have to improve your scores and apply elsewhere.

2. Discover it Secured

Annual Fee: $0

Purchase APR: Variable 23.74%

Why It’s a Good Option: Back in Dec. 2016, Discover announced that Chapter 7 bankruptcy would no longer automatically disqualify Discover it Secured applicants, so someone with that big blemish on their credit report could conceivably get approved. That’s great news for people with bad credit, because this card is pretty tops, as far as secured credit cards go.

There’s no annual fee, account reviews begin at seven months to determine whether to refund your deposit (a minimum of $200 is required to open an account), and there’s even a rewards program. Cardholders earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter, and 1% cash back on everything else. Plus, Discover is currently matching all the cash back you earn at the end of your first year.

Other Big Perks: Discover reports to all three credit bureaus, waives the late fee on your first missed payment and won’t impose a penalty APR if you miss a bill. Just be sure to pay your balances off in full: That APR is on the high side and will quickly negate any rewards you do earn.

3. First Progress Platinum Select MasterCard Secured Credit Card

Annual Fee: $39

Purchase APR: Variable 14.99%

Why it’s a Good Option: There’s no credit history or minimum credit score required for approval — so long as you don’t have a pending bankruptcy. First Progress reports to all three major credit bureaus, offers a flexible deposit range ($200 to $3,000) and features a reasonable annual fee and low APR. Again, the potential drawbacks are that you don’t have a built-in option to upgrade and the card isn’t currently available in Arkansas, Iowa, New York or Wisconsin.

4. primor Secured Visa Gold Card

Annual Fee: $49

Purchase APR: Fixed 9.99%

Why It’s a Good Option: This card touts guaranteed approval so long as your monthly income exceeds your monthly expenses by $100 or more. Plus, while that $49 annual fee can be bested, you’ll be hard-pressed to find a secured credit card with an APR lower than primor’s. There’s no penalty APR either, though you’ll still want to pay your bills on time and ideally in full. Your card use will be reported to all three credit bureaus, and you can put down a deposit of $200 to $5,000. There are no built-in upgrades with an unsecured credit card, however.

5. CreditOne Bank Visa

Annual Fee: $0 to $75, the first year; $0 to $99 thereafter, based on your credit

Purchase APR: Variable 15.90% to 24.40%

Why It’s a Good Option: OK, if you’ve got really bad credit, you’re probably going to pay a high annual fee and receive a high APR with the CreditOne Bank Visa. But it’s an unsecured credit card, meaning you won’t have to put down a deposit that serves as your credit limit. Plus, it’ll let you pre-qualify without incurring an inquiry (which would damage your already-hurt credit score), so it’s worth considering if you don’t want to go the secured-credit-card route. There are also rewards — 1% cash back on eligible purchases, including gas, groceries, mobile phone, internet, cable and satellite TV services. Just be extra careful about paying your balances off in full, and prepare for a fee when looking to get a higher credit limit, as one may apply.

At publishing time, the OpenSky Visa Secured, Discover it Secured, First Progress MasterCard Select Secured, primor Secured Visa Gold and CreditOne Bank Visa credit card are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, these relationships do not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Image: mapodile

The post Got the Worst Credit? These Cards Can Help You Rebuild It appeared first on Credit.com.

I Have Ridiculously Bad Credit. Can I Get a Credit Card?

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Is your credit so bad you get pre-declined credit card offers in the mail?

OK, that’s a joke — a bad joke — but bad credit is obviously no laughing matter. It can keep you from accomplishing your personal financial goals, and it can be expensive. People with bad credit typically pay higher interest rates, higher insurance rates, can be turned down for jobs and rental housing and, of course, can have a hard time getting a credit card.

In general, credit scores below 600 (on a scale of 300-850) are considered “bad.” Here’s a quick breakdown:

  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: below 600

If you’re in the bottom category, don’t despair. Not only can you improve your credit score to get a credit card, a mortgage or other financial dreams down the road, chances are you can get a credit card right now to help you on your way toward that better credit score.

The first step is knowing what your credit score is and whether everything on your credit report is accurate. (If you don’t know where your credit score stands, you can pull your credit reports for free each year at AnnualCreditReport.com. You can also view your credit scores for free each month on Credit.com.)

If your bad score is valid, you can work to improve it by getting accounts out of default, paying down high credit card balances and limiting new credit inquiries.

Your Options

Once you know where your credit score stands and you’ve corrected any errors, you can look at applying for credit cards created specifically for folks whose credit scores need some improvement. Most likely, you’ll need to start with a secured credit card from a reputable bank that has a reasonable annual fee.

Secured credit cards can be helpful for people trying to fix their credit or establish a credit history for the first time. Issuers negate some of the risk of doing business with such consumers by requiring a deposit to open the account. That deposit serves as the cardholder’s credit line, and beyond that, the card works like most other credit cards: You make purchases, and every billing cycle, you make a payment. If you don’t make your payment, however, the issuer can take your deposit.

Remember, your bad credit doesn’t have to last forever. Most negative information stays on your credit report for seven years (bankruptcy may remain on your report for up to 10 years). And the sooner you start establishing and maintaining solid lines of credit, the sooner you can improve your credit score, and your ability to get a non-secured credit card.

More Credit Card Reads:

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