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If your credit score is low, you've probably noticed that getting approved for a standard credit card is difficult or impossible. Bad credit cards (also called secured credit cards or subprime cards) are products designed specifically for people in this situation. Understanding how they work, what they cost, and how they fit into a credit-building strategy can help you make an informed decision.
A bad credit card is any credit card marketed to or accessible to people with low credit scores—typically those below 620, though specific thresholds vary by issuer. These cards come in two main types: secured cards and unsecured subprime cards.
Secured cards require you to deposit money into a savings account held by the card issuer. That deposit becomes your credit line; if you deposit $500, you get a $500 limit. The card issuer takes on less risk because they hold collateral. Unsecured subprime cards don't require a deposit, but they compensate for higher risk by charging higher fees and interest rates.
Both types report your payment activity to the three major credit bureaus (Equifax, Experian, and TransUnion), which is their primary purpose: helping you build or rebuild credit history.
Credit scores reflect your history of borrowing and repaying money. Lenders use them to predict whether you'll repay a new loan or credit card balance. A low score signals past missed payments, high debt, collections, bankruptcy, or a short credit history with few positive records.
The lower your score, the fewer options you'll have—and those options tend to come with trade-offs: higher annual percentage rates (APRs), annual fees, and stricter terms. This isn't arbitrary; lenders are pricing in the statistical likelihood of default.
Not all bad credit cards are equal. When evaluating your choices, several factors determine what's available and what it will cost you:
| Factor | How It Affects Your Options |
|---|---|
| Credit score range | Lower scores = fewer issuers willing to approve; higher fees and rates |
| Recent negative marks | Recent late payments, charge-offs, or bankruptcy may disqualify you entirely from some issuers |
| Income and debt-to-income ratio | Issuers verify ability to repay; lower income may limit approval odds or credit line size |
| Employment status | Some issuers require steady income; income verification is common |
| Time since last negative event | The longer ago a late payment or default, the more options typically open up |
Secured cards are easier to qualify for because your deposit reduces the issuer's risk. You control how much you're willing to risk, and approval odds are higher. The main downside: your money is tied up in a deposit. Some secured cards allow you to graduate to unsecured status after consistent on-time payments, at which point the deposit may be refunded.
Unsecured subprime cards don't tie up your cash, but they charge more for the privilege. Annual fees can range from modest to substantial, and APRs tend to be higher. Approval depends on your credit profile meeting the issuer's specific criteria, which can be harder to predict.
Bad credit cards almost always carry costs that standard cards don't:
Fees and interest vary widely among issuers, and the difference between products can be significant over time. A card with a $95 annual fee and 25% APR costs more than one with a $35 fee and 22% APR—but that depends on how much you carry and for how long. There's no single "best" bad credit card; the right choice depends on your planned use.
The sole value of these cards in your credit-building strategy is payment history. When you charge something and pay it on time, that activity is reported to credit bureaus. Over time, on-time payments demonstrate reliability and can raise your score.
However, important distinctions matter:
Since the right card depends on your specific circumstances, you'll want to assess:
A bad credit card alone won't fix a low score. It's one component of credit rebuilding, which typically includes:
The card is most effective as part of a consistent effort to demonstrate financial reliability over time. Progress is gradual, which is why patience and realistic expectations matter.
Your individual path forward depends on your specific credit history, financial situation, and goals—factors only you can fully assess with, if needed, guidance from a nonprofit credit counselor.
