Credit cards for people with bad credit do exist, but they come with higher costs and lower limits than standard cards
If your credit score is below 580 (the range most lenders call "poor" or "bad"), you will not be approved for a regular rewards card or a card with a 0% introductory rate. Instead, you have three realistic paths: a secured credit card that requires a cash deposit, a credit-builder card designed specifically to raise your score, or a subprime unsecured card that charges higher interest rates and fees but does not require collateral.
The choice depends on whether you have cash available to deposit, how quickly you need to rebuild, and whether you can handle the annual fees these cards charge. All three report to the three major credit bureaus (Equifax, Experian, and TransUnion), so on-time payments will gradually improve your score — but the timeline is measured in months, not weeks.
Key Takeaways
- Secured cards require you to deposit cash ($200 to $2,500) that becomes your credit limit, and most convert to unsecured cards after 7 to 24 months of on-time payments.
- Credit-builder cards charge annual fees ($35 to $99) but are designed to report to all three bureaus and help raise your score faster than subprime cards.
- Subprime unsecured cards do not require a deposit but charge annual percentage rates (APRs) of 25% to 36% and annual fees of $75 to $150.
- Your credit score typically rises 40 to 100 points within six months if you pay on time and keep your balance below 30% of your limit.
- Avoid cards that charge upfront fees before you receive the card, as these are often predatory and may not report to all three bureaus.
Secured cards: how the deposit works
A secured credit card requires you to open a savings account with the card issuer and deposit money that serves as collateral. That deposit becomes your credit limit — if you deposit $500, your limit is $500. You then use the card like any other card, making purchases and paying a monthly bill. The deposit stays in the account untouched; the card issuer holds it as insurance against default.
Most secured cards charge an annual fee ($0 to $95, depending on the issuer) and a standard APR (usually 18% to 24%). After you make on-time payments for 7 to 24 months — the timeline varies by card — the issuer will convert the card to an unsecured card, return your deposit, and often raise your credit limit. At that point, you have a regular credit card with better terms.
Secured cards work best if you have $200 to $2,500 available to deposit and can commit to using the card responsibly for at least a year. Examples include the Capital One Secured Mastercard, the Discover it Secured Card, and the U.S. Bank Altitude Go Visa Secured Card, though terms and fees change frequently — check the issuer's website for current details.
Credit-builder cards: designed to raise your score
Credit-builder cards are unsecured cards marketed specifically to people rebuilding credit. They typically charge annual fees ($35 to $99) and APRs in the 24% to 35% range, but they are designed to report to all three credit bureaus and often have lower initial limits ($300 to $500) that increase as your score improves.
The trade-off is that you pay the annual fee upfront, whether or not you use the card. Some issuers, like Milestone and Petal, waive the annual fee in the first year or do not charge one at all — but they may charge higher APRs to compensate. Read the terms carefully to understand what you are paying and when.
Credit-builder cards make sense if you want a card that is explicitly designed to help you rebuild and you can afford the annual fee. They often approve people with scores below 550, whereas secured cards and subprime unsecured cards may require a score of 500 or higher.
Subprime unsecured cards: no deposit, higher costs
Subprime unsecured cards do not require a deposit, so you do not need cash on hand to open one. However, they charge the highest costs: APRs typically range from 25% to 36%, and annual fees run $75 to $150. Your initial credit limit is usually $300 to $500.
These cards are useful if you do not have money to deposit and need a card immediately. They report to all three bureaus, so on-time payments will raise your score. However, the high APR means that carrying a balance becomes expensive quickly — a $500 balance at 30% APR costs about $12.50 per month in interest alone.
To minimize cost, treat a subprime card as a tool for building credit, not for carrying a balance. Make small purchases (a tank of gas, a grocery trip) and pay the full balance each month. This shows lenders you can manage credit responsibly without paying interest charges.
Comparing the three options side by side
| Card Type | Deposit Required | Annual Fee | APR Range | Initial Limit | Best For |
|---|---|---|---|---|---|
| Secured | $200–$2,500 | $0–$95 | 18%–24% | Equals deposit | People with cash and time to rebuild |
| Credit-builder | None | $35–$99 | 24%–35% | $300–$500 | People focused on score improvement |
| Subprime unsecured | None | $75–$150 | 25%–36% | $300–$500 | People without savings to deposit |
What happens to your credit score when you open a card
Opening any new credit card triggers a hard inquiry, which temporarily lowers your score by 5 to 10 points. This dip fades within a few months. More important is what happens after: if you make on-time payments and keep your balance low, your score will rise.
Most people see a 40 to 100 point increase within six months of consistent on-time payments. The exact amount depends on your starting score, your payment history, and how much of your credit limit you use. Keeping your balance below 30% of your limit matters more than paying in full, though paying in full is always better.
Do not open multiple cards at once, even if you are approved. Each application triggers a hard inquiry, and multiple inquiries in a short time signal risk to lenders and can lower your score further. Space applications at least three to six months apart.
Red flags: cards to avoid
Some cards marketed to people with bad credit are predatory. Avoid any card that charges upfront fees before you receive it — legitimate issuers charge annual fees after approval, not before. Also avoid cards that do not report to all three bureaus; if a card only reports to one or two, your score improvement will be slower and less visible to other lenders.
Check whether the card reports to Equifax, Experian, and TransUnion before you apply. This information is usually in the card's terms or on the issuer's website. If it is not listed, contact the issuer directly and ask.
Frequently Asked Questions
How long does it take to rebuild credit with a bad credit card?
Most people see meaningful improvement (50 to 100 points) within six months of on-time payments. Reaching "good" credit (670 or higher) typically takes 12 to 24 months, depending on your starting score and how much negative information is on your report. Older negative items (late payments, collections) have less impact over time.
Can I get a credit card with a score below 500?
Yes, but your options narrow. Secured cards and credit-builder cards are more likely to approve scores below 500 than subprime unsecured cards. Some issuers set minimums at 500, while others go lower. Check the issuer's website or call to ask about their minimum score before you apply.
What if I cannot afford the annual fee?
Secured cards often have no annual fee or charge less than $50, making them cheaper than credit-builder or subprime cards if you have cash to deposit. If you have no cash and no budget for a fee, look for credit-builder cards that waive the first-year fee (Petal and some others offer this) or consider waiting a few months to save for a secured card deposit.
Will applying for a credit card hurt my score?
Yes, but only temporarily. The hard inquiry lowers your score by 5 to 10 points, and this dip usually fades within three months. The long-term benefit of on-time payments outweighs the short-term hit, so do not let the inquiry scare you away from applying if you are ready to use the card responsibly.
Should I get a secured card or a credit-builder card?
If you have $200 to $2,500 to deposit, a secured card usually offers lower APRs and no annual fee, making it cheaper overall. If you do not have cash available or want a card explicitly designed to raise your score, a credit-builder card is the better choice. Both report to all three bureaus and will improve your score with on-time payments.