Credit cards for people with low credit scores usually feature exorbitant interest rates and more fees than those for individuals with excellent credit. These are known as sub-prime cards, and they can pave the way to establish or rebuild good credit for those who may have had past credit challenges.
Unsecured Options
There are a few unsecured credit card options for people with low FICO scores.
Total Visa
Total Visa, which made BadCredit.org's list of the easiest cards to get with bad credit, offers a credit limit of $300. However, it is accompanied by an initial annual fee of $75 that will be deducted once the card is issued, decreasing your available credit to $225. After the first year, the annual fee decreases to $48. Furthermore, you must also pay a $89 processing fee before activating the card. The APR is 29.99 percent for purchases and cash advances, and payment activity is reported to the credit bureaus.
To apply for the Total Visa, complete the online application or call (888) 267-7942.
First PREMIER Bank Credit Card
The First PREMIER® Bank Credit Card made WalletHub's list of top unsecured cards for people with poor credit. It is accompanied by a 36 percent APR for purchases and cash advances. In addition, the annual and monthly servicing fees are as follows:
-
$300 credit limit- $75 annual fee in the first year ($45 in subsequent years), $6.25 monthly servicing fee
-
$400 credit limit- $100 annual fee in the first year ($45 in subsequent years), $6.25 monthly servicing fee
-
$500 credit limit- $125 annual fee in the first year ($49 in subsequent years), $10.40 monthly servicing fee
A 27-day grace period applies and account activity is reported to the three major credit bureaus.
You can apply online and receive a decision in 60 seconds or less. Go to FirstPREMIER.com, then click the "less than perfect credit" icon to access the application. If approved, you will need to remit a $95 processing fee to access your available credit.
Milestone Gold MasterCard
The Milestone Gold MasterCard is recognized by MoneyUnder30 as one of the best credit cards for individuals with poor credit, which they define as a FICO score lower than 599. This card, which reports to the major credit bureaus, assesses an APR of 23.9 percent for purchases and 29.9 percent for cash advances. The annual fee is $35, $59 or $75 ($99 in subsequent years) and will be determined by your creditworthiness. In addition, an initial processing fee, which will be deducted from your available credit, may also apply when you open an account.
Before submitting a formal application, you will need to complete the online pre-qualification form. If you pass the screening, you will be invited to submit an application for credit. The pre-screening will not impact your credit score, but the official application counts as an inquiry.
Secured Options
If you are having trouble getting approved for an unsecured card, a secured card may be a viable option. However, a security deposit is required and the amount of your available credit will be equal to this amount.
First Progress Platinum Prestige MasterCard Secured
The First Progress Platinum Prestige MasterCard Secured is accompanied by an APR of 11.99 for purchases and 18.99 percent for cash advances. In fact, it is recommended by The Simple Dollar because it has an "APR that is fairly low not just for secured credit cards, but for credit cards in general." There are no account maintenance fees, but an annual fee of $44 applies. Furthermore, payment activity is reported the three major credit bureaus.
To apply for consideration, visit the website and complete the online application or call (877) 724-0932. If approved, you will need to make a security deposit between $200 and $2,000 to access your available credit.
Capital One Secured MasterCard
The Capital One Secured MasterCard is one of NerdWallet's top picks for people with bad credit. There is no annual fee, but an APR of 24.99 percent applies for purchases and cash advances.
When you make the minimum security deposit of $49, $99, or $200, you will be granted access to a credit limit of $200. Unlike most secured card products, you have 80 days from the date of approval to make the initial deposit.
In addition, you will automatically receive a credit limit increase if you make the first five payments on-time. You also have the option to deposit up to $3,000 to get a higher credit limit.
You can apply for the Capital One Secured MasterCard online, at a branch, or by calling 1-800-695-5500. If approved, all account information will be reported to the major credit bureaus.
What to Expect
Obtaining credit when you have a low FICO score can be expensive. The lower your score, the higher the lender's risk, and they charge more to cover that risk.
Minimize these expenses by paying balances in full each month and by thoroughly understanding fee structures. It helps to think of these types of cards as a means to an end. With careful management of your account, you will likely qualify for a more cost-effective option in one to two years.
