What are Unsecured Credit Cards?
Unsecured cards are traditional cards that can be used to make purchases and payments. They also attract fees and interest rates just like traditional cards. However, these cards are not backed by cash deposits. Cash deposits are requested by some credit card companies and they are used as collateral for the credit card. Cards that are backed by cash deposits are referred to as secured cards.
How Do Unsecured Cards Work for Bad Credit?
Lenders and credit card companies find it risky to offer credit to people with bad credit. Such people are likely to default on the credit. It is not new that people with bad credit are denied of credit facilities. Some card companies also offer their credit card to people with bad credit but they reduce the risk of defaulting by asking for a cash deposit.
This means that most companies prefer to offer secured cards to people with bad credit. In this case, they will use the cash you used as a deposit to pay the debt. Most of these cards also have low lines of credit initially. Luckily credit card companies have been generous about people with bad credit who cannot present down payments as well.
There are unsecured loans for borrowers with bad credit. Although these loans do not require initial cash deposits and they also have higher lending limits, they have their downsides as well. Unsecured loans for bad credit have higher interest rates. Although some do not charge annual fees, the ones that charge these fees charge high ones.
Bad credit makes it difficult to for you to access credit facilities. Nevertheless, it is still possible to get loans and sign up for credit cards. There are credit card options for people with poor credit. Check them out.
- Credit One Bank Premium Visa Card
This card offers a lot of features for people who need the convenience of a credit card. You can check if you qualify for this card without harming your credit. The interest rate on their cards ranges from 19.74% to 25. 74%. The rate is a variable rate which means that it can change depending on several factors. The application process is simple and you can complete an application in 8 minutes. The rates and fees depend on your qualification level and the exact card you opt for. Some qualified card users even enjoy $0 annual fee. There is a cash back program that allows you to enjoy rewards on card usage. The rewards depend on the card type as well. When you sign up for this card, you get to enjoy free online access to Experian credit score. You can track your score monthly. They also review your payment history periodically and offer opportunities for you to increase your line of credit. This card also offers you the opportunity to build your credit since they report to the credit reporting bureaus. This firm has served people, several people, since it was founded in 1984. It currently serves over 7 million customers nationwide.
- Fingerhut Credit Account
Fingerhut does not charge you a processing fee for applying for the card. You do not need to worry about an annual fee since there is none. This card is similar to a store card and offers you the convenience of shopping with your line of credit. You can shop at shops including KitchenAid, Samsung, Shark, LG, Song, NinJa, Addidas, Dell, and Graco. You should consider this card if you need a card that will help you to put your credit back on track. This is because Fingerhut reports to all three credit reporting bureaus. When you make full payments at the end of the month, you can build a good credit in no time. The entire application process is simple and fast. You can complete an application in 5 minutes. Fingerhut only charges interest on balances you carry from one month to the next month. This means that if you make full payments before the billing cycle ends, you will not be paying interest on your purchases.
- Total Visa Card
The Total Visa Card is another card that is available for people with bad credit scores. They will offer you a quick response after you complete the application. The credit score requirement ranges from 300 to 670 and you will need a checking account to qualify for this card. Once your application is approved you will be required to pay an $89 processing fee for this card. This card is accepted by merchants throughout the country and it is also easy to make online purchases with this card. This card helps you build credit history. If you make regular monthly payments, you can build a good credit since they report to all three credit reporting bureaus. They will also give you the opportunity to increase your line of credit without extra charges. Unfortunately, this card does not offer cash backs rewards, points, or air miles.
- Indigo Unsecured MasterCard
Indigo is popular among people who have filed for bankruptcy in the past. Most credit card companies do not have offers for people who have a history of bankruptcy, however, Indigo does not check that. They offer their cards at an APR of 23.9%. The good thing is that you can avoid this rate if you make full payments before the billing cycle ends. The APR is only charged on balances that have been carried from the previous cycle to the current cycle. Indigo charges an annual fee that ranges from $0 to $99. However, you may pay less in the first year. The annual fee for the first varies and it depends on your credit score. You may pay $0, $59, or $75 in the first year. If you are wondering if you will be approved for this card, you can check your eligibility without harming your credit score. This company conducts a soft inquiry to see if you qualify. Indigo charges 1% of each transaction when you make a foreign transaction.
- Milestone Gold MasterCard
This card is another card that is great for people who have filed for bankruptcy in the past. If you have a bankruptcy on your report, that will not disqualify you from getting this card. You can check if you qualify for the Milestone Gold MasterCard without affecting your credit score. This company conducts a soft inquiry. When you sign up, you will get a free online access to your account. You can also choose a card design without paying any fee for it. This card is accepted in over 35 million locations in the United States. The annual fee ranges from $35 to $99, however, you will not pay more than $75 in the first year. You may pay an account opening fee and this may be $5, $25, or $50. You will be a 1% fee if you make a foreign transaction. The ongoing APR charged for this card 23.90%. The company also charges 29.90% as the APR on a cash advance. You can consider this card if you are looking for a card that will help you to build your credit score. This card reports to all three credit reporting bureaus and if you make regular payments, your credit history will improve.
- Capital One QuickSilverOne Cash Rewards Credit Card
If you need a card that offers flat rate rewards, this card is a good option. This unsecured card is available for people who do not have good credit scores. With an annual fee of $39, you will get to enjoy several cash back rewards. You will earn 1.5% cash back on every purchase you make and there are no limits. The good thing is that these rewards do not expire as well. The APR charged on this card is 24.99%. There is no balance transfer fee and there is also no penalty APR. This means that you do not have to pay more if you miss payments. There is a 3% fee for cash advances. The percentage is calculated on the cash transfer amount. The fee will, however, not be less than $10. You will also enjoy protection against fraud when you lose your card. Plus, you will get the opportunity to increase your line of credit if you make payments on time for the first five months. And you can also monitor your credit profile with the CreditWise app. Signing up for this card also allows you to enjoy some insurance benefits. You will enjoy auto rental insurance, extended warranty coverage, and travel accident insurance.
- Discover it Student Cash Back
If you are a student looking for a credit card that has low credit card requirement and does not request for collateral, this card is one of the best options. There is no annual fee when you sign up for this card. The APR charged on the card is variable and it ranges from 14.99% to 23.99%. There is no foreign transaction fee when you use this card. The purchase intro APR for the first six months is 0%. You get to enjoy several rewards when you make purchases with this card. Also, you will earn 5% cash back rewards when you make payments restaurants, grocery shops, Amazon.com, or gas stations each quarter. You will also enjoy 1% cash back on other purchases. There is a quarterly limit to the rewards though. There is a reward for students who perform well as well. They get $20 statement credit when their GPA is 3.0 or higher. There is a late fee but you will not be charged if you late for the first time. When you sign up for the Discover it student card, you get free social security number alerts.
- Capital One Platinum Credit card
Capital One issues this card for people with poor credit. This card does not attract an annual fee but there is a 24.99% APR. Several other charges have been waived on this card. There is no foreign transaction fee, no penalty APR, and there is also no balance transfer fee. There is, however, a 3% charge on cash advances. The 3% is calculated on the cash advance amount. This is usually not less than $10 though. You will enjoy fraud coverage in case your card gets stolen. You will also enjoy price protection, auto rental insurance, travel accident insurance, and extended warranty coverage. There is a mobile app that allows you to access your account at any time. You can make payments by visiting the local branches. You also have the convenience of paying by check, or online. Another great feature is that you can choose due dates that are most convenient for you. When you make regular payments for the first five months, your line of credit will be increased. You can also build your credit when you use this card.
- Credit One Bank Platinum Visa with Cash Back Rewards
You can quickly check if you qualify for this card. The entire process is also secure. This card company charges an APR that ranges from 19.74% to 25.74%. The annual fee also ranges from $0 to $99. The cash advance fee is 8% of the cash advance amount and the foreign transaction fee is 3% of the transacted amount. You will get a 1% cash back on all eligible purchases. You do not need to sign up for the rewards. They are automatically posted to your account each month. This card comes with a $0 fraud liability which means you will not be held responsible for any unauthorized charges. You have the option of choosing a card design, however, you may be charged for this service. At the same time, you can request an increase in your line of credit but this will be processed at a cost. You can check if you pre-qualify for this card without harming your credit score.
- Journey Student Rewards from Capital One
This is another student card issued by Capital One. With this card, there is no annual fee. The APR charged on this card is 24.99%. You do not need to worry about penalty APR or balance transfer fees. Capital One, however, 3% of the amount you are processing for a cash advance as a cash advance fee. However, this fee will not be less than $10. You will enjoy 1% cash back on all purchases. This percentage can increase to 1.25% when you make on-time payments for that month. You can use this card to build your credit history and get access to a higher line of credit when you make on-time payments for the first 5 months. Also, you can enjoy $0 fraud liability when your card gets stolen. You can easily manage your account from the Capital One mobile app. Cardholders enjoy additional benefits including extended warranty protection on some selected purchases, travel accident insurance, and Master Rental coverage.
When you want to choose a credit card, it is important to do some research and compare the options. This will help you to choose one card that will work for you. It is important to check these things before making a choice.
The APR includes the rates such as interest rates on the card. It has a big impact on the total amount you will be paying. The APR varies from one credit card company to another. It is important to check and compare the amounts these companies are charging as APR before choosing the card you want. You can save a lot on rates if you choose to take your time to choose the card with the best rate.
- Annual fee
This is charged as a percentage of the line of credit annually. This fee can also impact the cost of the card. Credit card companies charge varying fees. Some even waive the annual fees completely. Some companies reduce the rate for the first year. You should check the options available before making a choice.
- Credit Score Requirements
Some credit card companies offer their cards at a higher credit score. If you do not have an excellent credit score, you cannot access this card. It is advisable to check and see if your score is okay before you apply. This increases your chances of accessing the credit.
- Credit Limits
You should also check the amount the lender is willing to offer to you. Compare the options and make sure that the amount will cover your expenses. You should also check if there are options for you to increase your credit limit. Some card issuers allow you to increase your limit after using the card responsibly.
You can also look at this when you apply for a card. Some lenders offer better rewards even though their fees are lower. Such deals are better. It will be great if you can find a card like that. You can also check the cardholder benefits.
- Reporting to the credit bureaus
Some cards allow you to build your credit history since they report to the credit bureaus. If you do not have a good credit history and you want to build one by getting a card and making regular payments, make sure you get a card that reports to the three main bureaus.
- Additional fees
There are foreign transaction fees, balance transfer fees, late fees, cash advance fees, and even credit limit fees in some cases. Check out these fees and make sure you choose a card that does not burden you with too many different types of fees. You can even get a card that will waive off some of these fees.
When considering all these, make sure that you choose a card that favors the things that you prioritize on this list. If you get access to a card that works for you with your poor credit, you should continue work towards improving your credit score.
There are several things you can do to improve your credit score. The most common steps taken to repair credit include the following. You should review your credit report for errors. If there are errors, you should file disputes to correct them.
You should also reduce spending so that you can reserve more money to pay up your debts. Make regular payments to improve your credit history.
You can also consider debt consolidation if you are struggling with several high interest loans. If you succeed in improving your credit score, you can start applying for other credit cards with high credit score requirements. Cards with high credit score requirements have low APRs and high rewards.
You will also get access to several credit card options when you have a high credit score. Hence, when you improve your credit score, you can opt for these credit cards with lower APRs and better rewards.