4 Types of Credit Cards for Bad Credit

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Whether applying for a credit card, a bank loan, a mortgage or line of credit, financial institutions will first review an individuals’ credit history to determine if they are eligible to borrow the necessary funds. A credit history reflects a borrower’s previous ability to consistently pay back the money they have been loaned, overtime.

In the instance that a borrower has been able to continue to pay back at least the minimum balance of the loan without missing a scheduled payment, then they are considered to have good credit history. If a payment has been missed or is late, then this means a borrower will receive a bad credit history. If an individual is deemed to have bad credit, financial institutions will be less likely to provide them with any future loans and refuse them when applying for a new credit card. With an improvement in credit scores, will allow a borrower to be more likely to secure a loan.

Borrowers who are experiencing credit debt will need to execute a plan to begin paying back the loans and increasing their credit score. Assistance for getting out of credit debt as well as credit cards for those with poor credit is offered through many financial institutions. Some of the credit cards for bad credit that are available include, Secured Credit Cards, Pre-paid Cards, and Low Interest Credit Cards.

Credit Cards

This credit card can be useful for any individual who has very a minimal personal credit history due to major life events, such as a divorce or even bankruptcy. Despite being rejected for credit card options, applicants with poor credit are guaranteed card approval and do not have to undergo the embarrassment of being subjected to a intensive credit check.

The process for applying can be easily done so over the phone or online. Prior to issuing the card, the borrower is required to deposit a fixed amount into a special account in order to guarantee that they have the means of repaying the given credit amount. This feature benefits the card user by making sure they do not overspend and the development of habitual money management skills.

When considering if this card is the right choice, borrowers will also want to be aware that these cards often come with a higher interest rate, additional fees, and offer lower credit limits. Applicants are unable to challenge these stipulations, because they are restricted in the range of credit card options they have access to and it is important to decide if the positive features of the card out way the steeper fees.

Guaranteed Credit Card Options For Bad Credit Include:

  • CapitalOne Guaranteed MasterCard ($59 annual fee, 19.80% APR)
  • CapitalOne Low Rate Guaranteed MasterCard ($79 annual fee, 14.9% APR)
  • Home Trust Secured VISA ($59 annual fee, 14.9& APR)
  • Home Trust Secured No Annual Fee Visa (no annual fee, 19.99% APR)

Credit Card for Bad Credit Photo

Home Trust Visa Low Rate Option – APPLY No Fee Option – APPLY
Interest rate on purchases 14.90% 19.99%
Annual fee for applicant $59 Annually or $5 Monthly $0
Annual fee for co-applicant $24 annually or $2 monthly $0
Cash advances 19.80% 19.99%
Minimum credit limit $500
Maximum credit limit $10,000
Interest-free grace period 21 days
Minimum Payment 3% of the balance or $10, whichever is greater
Foreign Currency Conversion 2%
NSF Fee $45
Over limit fee $29
Application Links APPLY HERE for Low Rate Option APPLY HERE for No Fee Option

Apply Now 14.90% $59 annual fee or $5 per monthApply Now 19.99% No annual fee

Secured Credit Cards

Secured credit cards act much the same as a standard card however a deposit is required upon initial startup to secure the credit limit funds and prior to usage. The credit limit for the card is either a percentage based on the amount of the deposit or can also be the same amount of the deposit.

With secured credit cards, financial institutions typically will follow the progress made by users and if credit history levels are on the rise, they will contact the individual and suggests a credit increase. These rewards serve as a steady reminder to stay committed to the importance of money management.

Conditions associations with this type of card, also include higher set up costs and annual fees. Users should also take note that withdrawals are not permitted, as the funds are required to remain intact in and act as collateral in cases where missed payments occur and credit limits are overdrawn. An advantage to this features means that borrowers are not subjected to harassment by collection agencies.

Secured Credit Card Options For Bad Credit Include:

  • Scotiabank Momentum Visa Infinite (%4 Cash Back, First Year Free)
  • Scotiabank SCENE Visa (No Fee)
  • BMO Preferred Rate Mastercard (17.5% APR)
  • Home Trust Equityline VISA Card (4.99%-13.99% APR)

Credit Card for Bad Credit Photo

Home Trust Visa Low Rate Option – APPLY No Fee Option – APPLY
Interest rate on purchases 14.90% 19.99%
Annual fee for applicant $59 Annually or $5 Monthly $0
Annual fee for co-applicant $24 annually or $2 monthly $0
Cash advances 19.80% 19.99%
Minimum credit limit $500
Maximum credit limit $10,000
Interest-free grace period 21 days
Minimum Payment 3% of the balance or $10, whichever is greater
Foreign Currency Conversion 2%
NSF Fee $45
Over limit fee $29
Application Links APPLY HERE for Low Rate Option APPLY HERE for No Fee Option

Apply Now 14.90% $59 annual fee or $5 per monthApply Now 19.99% No annual fee

Prepaid Credit Cards

Prepaid credit cards offer certain advantages to individuals with bad credit that traditional credit cards cannot. Essentially, these prepaid credit cards function similarly to that of gift cards by converting paper currency amounts to electronic currency via a secure online account. These cards are used as payment in stores worldwide as well as when making online purchases. They present a convenient method for shopping, can be given as gifts, as well as offering a safe alternative to carrying around cash. Pre-paid cards are also an ideal option for borrowers with bad credit because they do not require a credit check prior to using and will not affect future credit ratings in any way.

Since pre-paid card users can only spend the limit loaded onto the card, there is no way that they can overspend and interest does not accumulate with its use. While these cards can be used by anyone, they may be an effective solution for those who are looking for a suitable card that falls under the credit cards for bad credit option.

Prepaid Credit Cards Options Include:

  • RBC Visa Gift Card ($3.95 signup free)
  • RBC Prepaid Business Card ($3.75 signup fee)
  • BMO Prepaid Travel MasterCard ($9.95 signup fee)

Low Interest Cards

Lastly, individuals with poor credit may also benefit from a Low Interest Card. These credit cards maintain lower interest rates than other cards offer and are also appropriate if a borrower is likely to carry a balance from month to month. Ultimately, poor credit users will strive to pay each month in full, however they can save money initially on interest, as they work towards gaining better credit scores. Additionally, some of these cards include rewards and cash back with purchases made with the credit cards.

Low Interest Credit Card Options include:

  • Home Trust Secured VISA ($59 annual fee, 14.9& APR)
  • RBC Classic Low Rate Visa ($20 Annual fee, 11.99% APR)
  • Scotiabank Value Visa ($29 Annual fee, 11.99 % APR)
  • CIBC Select VISA ($29 Annual fee, 11.50% APR)

It is important for borrowers to examine all credit card types and features when deciding which one will be the best option for their direct needs. By taking advantage of the availability of credit cards for bad credit, individuals can not only learn how to become more effective at managing their own money, but also can work to improve their credit history, thus enabling them to secure future credit with less difficulty.

 

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