Avoid These Credit Cards If You Have Bad Credit

best credit cards for bad credit

If you’re trying to build or rebuild your credit, there are many credit cards that can help you reach your goal. The best credit cards for bad credit have low fees and reasonable interest rates.

Some, however, enlist predatory practices because they know your options are limited.

A secured credit card is usually the best way to go when you have poor or no credit. But many people either don’t have the cash to put down a deposit for a secured card, or they simply prefer to have an unsecured card.

To avoid being taken advantage of while you’re working to improve your credit, research credit card offers for bad credit thoroughly before applying for one.

‘Bad’ credit cards: What to watch out for

The Credit CARD Act of 2009 does a lot to protect consumers from unreasonable bank practices. But when it comes to interest rates and fees, some lenders have still managed to set theirs on the high end.

1. Sky-high APRs

According to Bankrate, the average credit card interest rate is around 16.00% (as of April 2017). While some of the best credit cards for bad credit offer lower APRs, there are those that charge upwards of 30.00%.

Regardless of your APR, it’s wise to pay off your balance in full each month to avoid paying interest. However, if you usually carry a balance, an emergency comes up, or you don’t have the cash to pay your balance in full, a high APR is going to set you back further.

2. Dubious fees

Most credit cards have fees associated with the account. Even some secured cards charge an annual fee. But those fees can be on the very high end with some bad credit cards – even as high as over $100 a year just for the privilege of using the card.

Less common fees include application fees, a fee you incur when you apply for the credit card, and monthly maintenance fees.

The best credit cards for bad credit charge low or no annual fees and help you rebuild credit without gouging your wallet.

3. Insufficient reporting

Despite all the extra fees and the higher interest rates, however, some bad credit cards may only report to one or two credit bureaus, leaving you with an incomplete history. To properly build your credit with a credit card, you need to use one that reports your activity to all three national credit bureausExperian, TransUnion, and Equifax.

Fortunately, these cards are few and far between – but they do exist. Check the lender’s website to see if they list any information on how they report your payment history. If they don’t have anything listed, call and ask.

All major banks report your activity to all three bureaus, so if you get a secured card with a well-known bank, you shouldn’t have any problems.

Some bad credit cards to avoid

When you’re working to rebuild your credit, it’s likely that you’ll receive credit card offers for bad credit in the mail. As you’re sifting through them, here are a few specific ones you may want to avoid (all info is current as of April 2017):

First Premier Bank Credit Card

  • The APR is 36.00%
  • It charges a $95 processing fee
  • The annual fee is as high as $125 the first year, then $49 annually after that
  • It has a monthly maintenance fee of up to $8 the first year, then up to $10.40 per month after that

Horizon Gold Card

  • You can only use it at the Horizon Outlet online mall
  • It requires a “membership plan,” which costs $24.95 per month
  • According to its terms and conditions, it “reports to at least one major bureau”

Credit One cards

  • There’s no guarantee which card you’ll get
  • You may or may not get a grace period between your statement date and due date
  • Your annual fee could be $75 to $99 after the first year
  • You may or may not earn rewards on certain purchases, depending on the card they choose for you

Best credit cards for bad credit

As mentioned above, the best credit card offers for bad credit are usually secured credit cards. While a security deposit isn’t ideal, in most cases it’s better than the alternative.

Here are a few secured credit cards to consider as you’re building your credit (all info is current as of April 2017):

Platinum Prestige MasterCard Secured

  • Requires a deposit minimum of $200
  • Has a low 11.99% variable APR
  • No credit history required
  • $44 annual fee

Discover it Secured

  • Requires a deposit minimum of $200
  • Offers rewards, including bonus rewards on gas and restaurant purchases
  • No annual fee
  • They may graduate you to an unsecured card starting at seven months
  • Free access to your FICO score

OpenSky Secured Visa

  • Requires a deposit minimum of $200
  • No credit check (this is beneficial if you have a lot of major negative items on your credit report)
  • You don’t need a checking account (most banks require this)
  • $35 annual fee

The bottom line

As you’re working to rebuild your credit, getting the wrong credit card can make it harder to reach your goal. What’s more, all the extra fees can turn it into a money pit.

As you’re researching credit card offers for bad credit, be sure to check the fine print. Look out for predatory rates and fees. And make sure they report payment history to all three credit bureaus.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderRates (APR)Eligible Degrees 
Check out the testimonials and our in-depth reviews!
2.58% - 7.25%Undergrad
& Graduate
Visit SoFi
2.99% - 6.99%Undergrad
& Graduate
Visit Laurel Road
2.57% - 6.32%Undergrad
& Graduate
Visit Earnest
2.57% - 6.49%Undergrad
& Graduate
Visit CommonBond
2.56% - 7.82%Undergrad
& Graduate
Visit Lendkey
2.63% - 8.34%Undergrad
& Graduate
Visit Citizens
Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.