Sometimes, it happens that a person who wants to get a loan is rejected, which can significantly worsen his rating due to the reduction in loan requests that come with any application. It also happens that initially the client has a bad credit history or none.
Therefore, many credit card companies require a deposit before extending a line of credit. These cards are known as secured, while those that do not require a deposit are called unsecured.
In this article, you will learn about the best-unsecured credit cards for bad credit. We chose these cards because they target consumers with scores of 580 or lower on the FICO scale.
Unsecured Credit Cards for Bad Credit: Best Offers
If you have bad credit, you should consider using a UCC. Most of these cards allow you to credit check loan conditions in a pre-qualification process that won’t hurt your score. They also tend to have high interest rates and fees, so consider them as a stopover on your way to the best credit cards.
Credit One Bank® Platinum Visa® for Rebuilding Credit
This Visa credit card has a 1% cashback on qualifying gasoline, groceries and mobile, internet, cable and satellite TV services rebuilding credit. Customers are charged an annual fee of $75 for the first year. After that, $99/year ($8.25/month). This is one of the disadvantages of the Credit One Bank card. The ongoing variable APR is 24.24%. You can have a score of 300-670 to qualify for rebuilding credit.
You can start with online manageable monthly payments $300 loan limit in Credit One Bank, and regular checks can help you prove your creditworthiness in order to qualify for a future line of credit increases. ou could earn back your security deposit as a statement credit when you use your card responsibly.
Surge Mastercard has a minimum credit limit of up to $1,000 and doubles to higher credit limit to $2,000 after timely payments within 6 months. Initial loan limit from 300 to 1000 US dollars (subject to available credit). The bank provides a quick and easy application process for its customers, as well as free 24/7 online checking account access.
With Surge Mastercard you can make payments, check due dates, and view reports online or through the app. You also get free access to Experian VantageScore to track your credit progress. The ongoing variable APR is 24.99% – 29.99%. The FICO score is derived from your reports sent to the three major credit bureaus.
This card offers credit limits range that is wider than some of the competition. Reflex Mastercard’s limit is up to $1,000 and doubles to $2,000 after on time payments within 6 months. Initial loan limit from 300 to 1000 US dollars (subject to available credit). The interest rate is variable and ranges from 24.99% to 29.99%.
Reflex Mastercard offers fraud protection and the ability to increase your loan limit by making six consecutive payments on time. Depending on your score, you may be able to avoid the monthly service fee (which is always charged during the first year anyway). Other fees include international transaction fees and fees for additional cards, cash advances, late payments, and chargebacks.
You can use this card to improve your credit history as it reports your transactions to all three credit bureaus. FIT Mastercard has a $400 loan limit, and it doubles to $800 if you make your first 6 monthly minimum payments on time. The regular APR is 29.99%. The FICO score is derived from your reports sent to the three major credit bureaus.
The card charges a one-time processing fee, an annual fee, and a cash advance fee, international transactions, late or chargeback payments, and add-on cards. During the first 12 months after opening an account, you do not pay a monthly service fee. You can also purchase additional credit protection against loss of life, job loss, disability, or hospitalization.
Navy FCU nRewards® Secured Credit Card
Navy FCU nRewards is a secure card with no annual fee, balance transfer fees or rewards for those who qualify for military service and want to build credit profile. You must have at least a grandparent or grandchild who is a veteran or active duty member, as the federal navy requires membership.
When used, you earn 1 point for every dollar spent. Points can be redeemed for cash, credit statements, gift cards, and merchandise. There is no annual usage fee. The Navy FCU nReward minimum deposit is $200. The current annual interest rate is 18% of the variable annual interest rate on eligible purchases and balance transfers.
Tomo Credit Card
The Tomo Visa Credit Card is great for those with good financial records but no credit history in the US. Your salary information and other financial considerations are used to determine your eligibility.By using the card, you earn 1% unlimited cashback on all eligible purchases. There is no annual fee.
The credit limit reaches up to $10,000. No interest charges. Besides, you don’t have to be a US citizen to apply for the card; however, you must have SSN or ITIN and a government-issued ID. All of the above must be valid.
Total Visa® Card
The Total Visa credit card offers zero liability for fraud and a review of the credit limit after a year. The card is subject to a one-time program fee, an annual fee, and a monthly maintenance fee, which is not charged during the first year, as is the cash advance fee. The credit limit is $300. The Annual Percentage Rate for Purchases and APR for Cash Advances are both 34.99%. Holders of active Total Visa cards get exclusive access to free credit monitoring from TransUnion.
Milestone Mastercard is right for you if your payment history is not perfect. You will have access to your mobile account at any time with Milestone Mastercard. The regular APR is 24.99%. The annual fee is between $35 and $99 for an international transaction, but there is no monthly maintenance fee. There are also fees for cash advances, over-limit transactions, and late or chargeback payments. The card automatically turns on self-protection if it is lost or stolen.
Unlike many of the other cards in this review, this one does not charge an annual fee. Suitable for those with poor history. There are no cash withdrawal fees for the first year, but there are fees for foreign transactions, late payments, over-limit transactions, and chargebacks. The regular APR is 24.99%. Using Indigo Mastercard you get access to your mobile account at any time and protection of your funds from fraud in case of theft or loss of the card.
Features of Unsecured Credit Cards for Bad Credit
Unlike secured cards, which require a $200 to $3,000 deposit, unsecured cards do not require a deposit. They also have lower interest rates than secured cards, even if the latter have access to a deposit, to help reduce the card issuer’s risk. This means you can make interest-free purchases during the introductory period before the regular APR kicks in.
Some bank accounts do not require customers to pay annual or transaction fees. But, in other cases, the cardholder may be required to pay an annual fee. These cards are unlikely to offer reward programs in exchange for a commission, such as cash back or points on purchases.
Your credit limit can be thousands of dollars or just a few hundred; however, when you use your card to make a purchase, it is important to have the funds to pay your bill in full at the end of the month. Because if you cannot do that, interest will start to pile up, and you may find yourself in a quandary.
What Is an Unsecured Credit Card?
Most credit cards on the market are UCCs. They provide their customers with a line of credit that they can use for their needs and then repay or make payments every month. The eligibility and loan limit for a UCC is based on the issuer’s determination of whether a person will be able to make qualifying payments on any balances they have in their bank account.
When a customer applies for a UCC, the bank issuer will use their personal information, including annual income, as well as their rating, to determine their likelihood of participation. Because UCCs are not backed by any kind of security deposit, the card issuer will not have access to the funds to pay off any outstanding debt in your account. That’s why issuers consider a number of factors to determine the likelihood of a person being able to pay expenses before an application is approved.
How Does an Unsecured Credit Card Work?
Unlike auto loans or mortgages, a UCC does not require collateral, so debt terms depend on the borrower’s score, ability to pay, application information, and other factors. Since the debt is unsecured, this type of debt tends to be a little riskier.
An unsecured card uses your credit score to determine whether you are capable of handling loans and payments responsibly and making payments on time. The higher your rating, the better. Most of these cards require credit ranging from good to excellent (670-850). Then you can qualify for many different types of bonuses. Once your credit score drops below 580, your options become much more limited. While you can still find unsecured card, you will probably have to pay more.
Secured Cards vs. Unsecured Cards
Don’t know what to choose when issuing loan lines: secure or unsecured card? This is where your credit history comes into play.
If you have a poor credit score, a secured credit card may be the best option. If your loan is already good or excellent (670 or higher), an unsecured option may give you more benefits. In case you can’t afford the $200 security deposit, you should look for other ways to improve your score, including becoming an authorized user of someone else’s account. For the rest, see the comparison table:
|UNSECURED CREDIT CARDS||SECURED CREDIT CARDS|
|Do not require a deposit for collateral||Require a deposit for collateral|
|Usually require a good credit score and payment history||Best for people with poor credit scores or no credit history|
|Often offer rewards programs||Don’t usually offer rewards programs|
How To Get an Unsecured Credit Card with Bad Credit
If you want to apply for a card for credit and are not sure what conditions you may qualify for, you should make your credit check first. Depending on your performance, it may be better to focus on cards with more lenient underwriting and work on improving your debiting. If you don’t know what to do with your credit score, find a way to consult with a financial expert.
In general, these cards are more difficult to obtain without a good history, but this is where cards specifically designed for subprime borrowers come in handy. If approved, you can use the relatively normal line of loan products. But you have to put up with the downsides and risks that these cards usually carry, such as high APRs.
Can an Unsecured Credit Card Help You Build Credit?
Using a secured card can help you live within your means and avoid big debts if you want to try to rebuild your credit. This can improve your credit score. It will also help you learn how to use credit wisely. If you have a bad score, unsecured cards can have high fees or high interest rates, and neither option is good for those trying to rebuild credit.
Getting a UCC with a bad credit score can be a good stepping stone towards improving your credit history. Choosing the right card will depend on you and your personal financial history with your financial goals. Watch out for high fees, interest charges, and unreasonably low credit limit that will keep credit usage high and credit levels low.