Credit cards for people with low credit scores exist, but they come with higher costs and lower limits
You can get a credit card with bad credit. The main options are secured credit cards (which require a cash deposit), credit-builder cards (designed specifically to help rebuild), and unsecured cards marketed to people with poor credit. Each charges higher interest rates and annual fees than cards for people with good credit, and each offers a lower credit limit — usually between $300 and $2,500 to start.
The trade-off is real: you will pay more to borrow money. But if you use the card responsibly — spending small amounts and paying the full balance on time each month — your credit score can improve within 6 to 12 months, which then opens access to better cards with lower rates and no annual fees.
Key Takeaways
- Secured cards require you to deposit cash into a savings account that becomes your credit limit, and most convert to unsecured cards after 7 to 18 months of on-time payments.
- Credit-builder cards often have annual fees between $25 and $99 and interest rates between 18% and 36%, but they are designed to report to all three credit bureaus and help your score climb.
- Unsecured cards for bad credit exist but charge similar or higher fees and rates; secured cards are usually the better choice because your deposit protects the issuer.
- Your credit limit on any of these cards will be low at first, but it may increase after six months of on-time payments without you having to reapply.
How secured credit cards work and why they are often the best starting point
A secured credit card requires you to put cash into a savings account held by the card issuer. That deposit becomes your credit limit. If you deposit $500, your credit limit is $500. You then use the card like any other — make purchases, receive a bill, and pay it. The deposit sits untouched unless you stop paying your bill.
Banks offer secured cards because the deposit removes their risk. That means they are more willing to issue them to people with low scores, late payments, or no credit history. Most secured cards charge an annual fee between $0 and $95, and interest rates typically range from 16% to 24%. After 7 to 18 months of on-time payments, many issuers convert the card to an unsecured card, return your deposit, and lower your interest rate.
The catch: your deposit is locked up the entire time. You cannot spend it or move it. If you need that cash, a secured card is not the right choice. But if you have $500 to $2,000 sitting in savings and you are willing to leave it there while you rebuild, this is usually the fastest path to a better credit score.
Credit-builder cards: designed to help your score climb
Some card issuers market cards specifically as credit-builder products. These are unsecured — no deposit required — but they charge higher annual fees and interest rates than secured cards. Annual fees often range from $25 to $99, and interest rates can be 24% to 36% or higher.
The appeal is that you do not need cash upfront. The downside is the cost: if you carry a balance, the interest adds up quickly. A $500 balance at 30% interest costs you $12.50 per month in interest alone. These cards work best if you use them for small purchases you can pay off in full each month, so interest never charges.
Credit-builder cards do report to all three credit bureaus (Equifax, Experian, and TransUnion), so on-time payments show up on your credit report and help your score. But because the fees and rates are high, a secured card is usually the better choice if you have cash available for a deposit.
Unsecured cards for bad credit: why they are rarely the best option
Some issuers offer unsecured cards to people with poor credit — no deposit, no credit-builder label, just a regular card. These sound appealing because there is no upfront cash requirement. In practice, they charge annual fees and interest rates similar to or higher than credit-builder cards, with lower credit limits and fewer protections.
The reason to avoid them: you get the same high costs as a credit-builder card but without the explicit focus on helping your score climb. A secured card or a true credit-builder card is a clearer choice because the issuer has designed it with your situation in mind.
What to look for when comparing cards
Compare cards on four things: annual fee, interest rate (called APR), credit limit, and whether the issuer reports to all three credit bureaus. A card that reports to only one bureau will help your score less than one that reports to all three.
For secured cards, also check the conversion policy: how long until the card converts to unsecured, and what happens to your deposit when it does. Some issuers return it automatically; others require you to request it. Some lower your interest rate at conversion; others keep it the same.
Do not choose based on credit limit alone. A $300 limit with a $0 annual fee and 18% APR is better than a $1,000 limit with a $95 annual fee and 28% APR, especially if you are rebuilding. You want the card that costs you the least while you prove you can pay on time.
How to use the card to actually improve your credit score
Getting the card is the first step. Using it correctly is what rebuilds your score. Make a small purchase each month — a coffee, a tank of gas, a subscription — and pay the full balance before the due date. This shows lenders you can borrow and repay reliably.
Do not carry a balance to "build credit faster." That is a myth. Carrying a balance costs you money in interest and does not help your score any more than paying in full does. Pay in full every month, on time, without exception. After 6 to 12 months of this, your score will rise, and you will see offers for better cards in the mail or online.
Keep the card open even after you stop using it actively. Closing it can hurt your score because it reduces the total credit available to you. Once your score improves enough to get a better card, keep both open and use the new one for new purchases.
Where to find and compare these cards
Secured cards are offered by most major banks and many credit unions. Capital One, Discover, and U.S. Bank all offer secured cards with different fee and rate structures. Credit unions often have lower fees and rates than national banks, so check your local credit union first if you are a member.
Credit-builder cards are less common but available from some online banks and fintech companies. Compare the annual fee, APR, and credit limit on each issuer's website. Do not apply to multiple cards at once — each application creates a hard inquiry on your credit report, which can lower your score slightly. Apply to one, wait to see if you are approved, then apply to another if needed.
You can also search comparison sites that list cards by type, but read the terms on the issuer's own website before applying. Comparison sites sometimes have outdated information about fees or rates.
Frequently Asked Questions
Will getting a credit card hurt my credit score?
A hard inquiry from the application will lower your score by a few points temporarily. But once you open the card and use it responsibly, your score will rise. The long-term benefit outweighs the short-term dip.
What if I cannot get approved for any card?
If you are denied for a secured card, ask the issuer why. Sometimes it is because of a very recent bankruptcy or fraud on your report. You may need to wait a few months or dispute errors on your credit report before applying again. A credit union may be more flexible than a national bank.
Can I use a prepaid card instead of a credit card?
Prepaid cards do not help your credit score because they do not report to credit bureaus. They are useful for budgeting and avoiding overdrafts, but they will not rebuild your credit. You need an actual credit card — secured or unsecured — that reports to the bureaus.
How long until my credit score improves?
Most people see a noticeable improvement within 6 to 12 months of on-time payments. The exact timeline depends on how low your score is now and what caused the damage. Late payments and collections take longer to recover from than a high credit utilization ratio.
Should I get multiple cards at once to rebuild faster?
No. Start with one card, use it responsibly for at least six months, then add a second if you want. Multiple applications in a short time lower your score and signal to lenders that you are desperate for credit, which is a red flag.