You can get a credit card with bad credit, but you will pay higher interest rates and start with a lower credit limit
Banks and card issuers do lend to people with bad credit histories. They do this through secured credit cards, cards designed for rebuilding credit, and subprime cards that accept lower credit scores. The tradeoff is real: interest rates run 20% to 36% annually, annual fees often explore, and your starting limit is typically $300 to $500. But these cards work the same way as standard cards — you make purchases, receive a statement, and pay a bill each month. The difference is that every payment you make gets reported to the three credit bureaus (Equifax, Experian, and TransUnion), which means on-time payments actually improve your credit score over time.
The fastest route is a secured card backed by a cash deposit you control. You deposit $300 to $2,500 into a savings account held by the card issuer, and that amount becomes your credit limit. You use the card normally, pay the bill on time each month, and after 6 to 18 months of good payment history, many issuers convert the card to an unsecured card and return your deposit. This is the most straightforward path because approval does not depend on your credit score — it depends on whether you have the cash to deposit.
Key Takeaways
- Secured cards require a cash deposit equal to your credit limit, but approval is nearly automatic if you have the deposit money and a valid ID.
- Unsecured subprime cards do not require a deposit but charge higher fees and interest rates, and approval depends on your credit score and income.
- Every on-time payment on any of these cards gets reported to credit bureaus and helps rebuild your score, usually within 6 to 12 months of consistent use.
- You will pay annual fees ($25 to $99) and high interest rates (20% to 36%), so use the card for small purchases you can pay off quickly to minimize interest charges.
- Avoid cards that require you to pay fees upfront before you receive the card, or that promise may provide approval — these are often scams.
Secured cards: deposit money, get a card when ready
A secured card is the most direct option if you have cash available. You open a savings account with the card issuer, deposit between $300 and $2,500, and that deposit becomes your credit limit. You then use the card to make purchases, and the issuer reports your payments to Equifax, Experian, and TransUnion each month. Because the issuer holds your deposit as collateral, they take almost no risk — approval is nearly automatic for anyone with a valid ID, a Social Security number, and the deposit amount.
Common issuers of secured cards include Capital One, Discover, and U.S. Bank. Each has slightly different terms: Capital One's Secured Mastercard charges a $39 annual fee and reports to all three bureaus; Discover's Secured Card charges no annual fee but requires a minimum $200 deposit; U.S. Bank's Secured Card charges $25 annually. You can compare these on each bank's website by searching "[Bank name] secured credit card." The process takes 10 to 15 minutes online, and you will know within minutes whether you are approved.
After 6 to 18 months of on-time payments, the issuer will review your account and often convert it to a standard unsecured card. When that happens, your deposit is returned to you in full. Some issuers do this automatically; others require you to request the conversion. Check your card's terms to see what the issuer's policy is.
Unsecured subprime cards: no deposit required, but higher fees
If you do not have cash to deposit, an unsecured subprime card is an alternative. These cards do not require a deposit, but approval depends on your credit score, income, and payment history. Issuers like Capital One (their non-secured card), Milestone, and Credit One offer cards to people with credit scores below 600. The catch is that these cards charge higher annual fees ($39 to $99) and interest rates (24% to 36%), and your starting credit limit is usually $300 to $500.
To find these cards, search "credit card for bad credit" or "subprime credit card" on the issuer's website. You will fill out an online process with your name, address, Social Security number, income, and employment information. The issuer will pull a hard inquiry on your credit report, which temporarily lowers your score by a few points. Most decisions come back within 24 to 48 hours. If approved, the card arrives by mail within 7 to 10 business days.
The risk with unsecured subprime cards is that fees can eat into your credit limit quickly. If you receive a $300 limit and the annual fee is $99, you have only $201 left to spend before you hit your limit. For this reason, secured cards are usually the better choice if you have the deposit available — you avoid the high annual fees and get the same credit-building benefit.
What happens after you get the card
Once your card arrives, use it for small, regular purchases that you can pay off in full each month. Good examples are a monthly subscription ($15), a gas purchase ($40), or groceries ($60). The goal is to show the credit bureaus that you can borrow money and pay it back on time. Paying in full each month also means you avoid interest charges, which can add up quickly at 20% to 36% annual rates.
Set up automatic payments so you never miss a due date. Most card issuers let you set up autopay through their online portal or mobile app. You can choose to pay the full balance automatically each month, or a fixed amount. Missing even one payment will hurt your credit score and may trigger a late fee ($25 to $40). On-time payments, by contrast, are reported to all three credit bureaus and are the single biggest factor in rebuilding your score.
After 6 to 12 months of on-time payments, you should see your credit score improve by 50 to 100 points, depending on how bad it was to start. Once your score reaches 620 or higher, you become may be able to access for standard credit cards with lower interest rates and better terms. At that point, you can close the secured or subprime card (or keep it open to maintain a longer credit history) and move to a better card.
Red flags: cards to avoid
Some companies prey on people with bad credit by charging upfront fees before the card is issued, or by making false promises about approval. Avoid any card that asks you to pay a fee before you receive the card in the mail. Legitimate card issuers charge annual fees only after you have the card and can use it. Similarly, avoid cards that promise "may provide approval" or "approval in minutes" — these are often scams designed to collect your personal information or upfront fees.
Also be cautious of cards that charge processing fees, process fees, or "account setup" fees. These are not standard in the credit card industry. A legitimate secured or subprime card will charge only an annual fee (which appears on your statement after approval) and interest on any balance you carry. If a company is asking for money before you have the card, or promising something that sounds too good to be true, it probably is.
How secured and subprime cards affect your credit score
Every time you use your card and make a payment, that information is reported to Equifax, Experian, and TransUnion. Credit bureaus use this information to calculate your credit score, which ranges from 300 to 850. The biggest factors in your score are payment history (35%) and credit utilization (30%). This means that on-time payments and keeping your balance low relative to your limit have the largest impact on rebuilding your score.
If you have a $300 limit and carry a $150 balance, your credit utilization is 50%, which is considered high and will hurt your score. If you keep the balance at $30 or less, your utilization is 10%, which is good. For this reason, using your card for small purchases and paying them off quickly is the fastest way to rebuild credit. After 6 to 12 months of this pattern, most people see their score improve enough to may have access to for better cards.
Frequently Asked Questions
How long does it take to rebuild credit with a secured card?
Most people see a 50 to 100 point improvement in their credit score within 6 to 12 months of on-time payments. The exact timeline depends on how bad your credit was to start and how consistently you make payments. After 18 to 24 months, you should be may be able to access for standard credit cards with lower interest rates.
Can I use a secured card for cash withdrawals at an ATM?
Most secured cards work like regular credit cards and do not allow cash withdrawals. Some issuers offer this feature, but it usually comes with a cash advance fee (3% to 5% of the amount) and a higher interest rate. It is better to use the card for purchases only and avoid cash advances.
What if I miss a payment on my secured card?
A missed payment will be reported to all three credit bureaus and will lower your score by 100 points or more. You will also be charged a late fee ($25 to $40) and may face a higher interest rate. If you miss a payment, contact the issuer when ready to bring the account current and ask whether they will waive the late fee.
Do I need to close my old card after I get a new one?
No. Keeping your old secured or subprime card open actually helps your credit score because it maintains your credit history length and keeps your overall credit utilization low. You can close it after a year or two if you want, but there is no benefit to closing it when ready after you get a better card.
Will a secured card show up differently on my credit report than a regular card?
No. To the credit bureaus, a secured card looks the same as any other credit card. Your payment history and credit utilization are reported the same way, so lenders cannot tell whether you used a secured card or a standard card to rebuild your credit.