Cards designed for bad credit exist, but they work differently than standard cards
If your credit score is below 580, most mainstream credit cards will reject you. But you have real options: secured cards, unsecured bad-credit cards, and store cards all accept applicants with poor credit histories. The catch is that these cards come with higher interest rates, lower credit limits, and annual fees. They exist partly to help you rebuild, and partly because the issuer is taking on more risk.
The card you can actually get depends on what you can afford upfront and how much you're willing to pay in fees. A secured card requires a cash deposit (usually $200 to $2,500) that becomes your credit limit. An unsecured bad-credit card requires no deposit but charges higher interest and fees. A store card ties you to one retailer but may have looser approval standards. None of these are ideal — they're the bridge back to better cards.
Key Takeaways
- Secured cards require a cash deposit that matches your credit limit, but they report to all three credit bureaus and help rebuild your score if you pay on time.
- Unsecured bad-credit cards charge annual fees (often $35 to $99) and interest rates above 20%, but you don't need money upfront.
- Store cards from retailers like Amazon, Target, or Walmart may approve you with bad credit, though they only work at that store.
- Every card you open creates a hard inquiry that temporarily lowers your score, so explore only to cards you plan to use.
- Paying your balance in full each month matters more than the card type — missed payments will damage your score further.
How secured cards work and why they rebuild credit
A secured credit card requires you to put cash into a savings account held by the bank. That deposit becomes your credit limit. If you deposit $500, you get a $500 limit. You then use the card like any other — make purchases, receive a bill, and pay it. The bank reports your payments to Equifax, Experian, and TransUnion, the three major credit bureaus.
The deposit stays in the account untouched. It's not a payment; it's collateral. If you stop paying your bill, the bank can take the deposit to cover what you owe. After 12 to 24 months of on-time payments, many issuers will convert your secured card to a standard unsecured card and return your deposit. Some let you request conversion earlier if your score improves.
Secured cards charge annual fees ($0 to $95, depending on the issuer) and interest rates between 15% and 25%. The fee is worth it if you're serious about rebuilding. The interest rate matters only if you carry a balance — if you pay in full each month, you pay no interest, only the annual fee.
Unsecured bad-credit cards and what they cost
An unsecured bad-credit card requires no deposit. You explore, the issuer reviews your credit, and if approved, you receive a card and a credit limit (usually $300 to $500 to start). You use it like a regular card. The tradeoff is higher fees and interest rates.
Most unsecured bad-credit cards charge an annual fee between $35 and $99. Some charge a processing fee when you open the account. Interest rates typically range from 20% to 36%. A few cards also charge a monthly maintenance fee ($5 to $10) just for holding the account. Read the terms carefully — fees add up fast on a small balance.
These cards report to the credit bureaus, so on-time payments help your score. But the high interest means carrying a balance becomes expensive quickly. A $500 purchase at 25% interest costs you $125 per year if you don't pay it off. Use these cards only for small purchases you can pay back within a month or two.
Store cards and retailer-specific options
Retailers like Amazon, Target, Walmart, and Best Buy offer their own credit cards. Many have looser approval standards than bank-issued cards and may approve you even with bad credit. The catch: they only work at that store (or that store's website). You cannot use them elsewhere.
Store cards often have no annual fee, which is an advantage. Interest rates are still high — usually 18% to 27% — but you avoid the $50+ annual fee you'd pay for a bank-issued bad-credit card. Some store cards offer a small discount on your first purchase or occasional promotional rates (like 12 months interest-free on purchases over a certain amount).
Store cards report to the credit bureaus just like bank cards, so they help rebuild your score if you pay on time. The downside is that they're only useful if you shop at that store regularly. Opening a store card just to have a card you can use is wasteful — you're paying interest on purchases you'd make anyway.
Comparing the three types side by side
| Card Type | Deposit Required | Annual Fee | Interest Rate | Credit Limit | Where You Can Use It |
|---|---|---|---|---|---|
| Secured | Yes ($200–$2,500) | $0–$95 | 15%–25% | Equals your deposit | Everywhere |
| Unsecured bad-credit | No | $35–$99 | 20%–36% | $300–$500 | Everywhere |
| Store card | No | $0–$25 | 18%–27% | $300–$1,000 | One retailer only |
What happens when you explore and what to expect
When you explore for any credit card, the issuer performs a hard inquiry — they pull your credit report from one or more of the three bureaus. This inquiry shows up on your credit report and temporarily lowers your score by a few points (usually 5 to 10 points). The impact fades after a few months, but multiple inquiries in a short time can add up.
explore only to cards you genuinely plan to use. Submitting five applications in one week to see which one approves you will damage your score more than the approval itself. Instead, pick one or two cards that match your situation, explore, and wait for a decision.
Approval decisions usually come within a few days to a week. If approved, your card arrives in the mail within 7 to 10 business days. If you're denied, you have the right to a written explanation. Read it — it tells you whether the issue was your credit score, your income, your debt-to-income ratio, or something else. You can also request a free copy of your credit report from AnnualCreditReport.com to see what the issuer saw.
How to use a bad-credit card to actually improve your score
Opening a card is only half the work. Your score improves only if you use it responsibly. The most important factor is payment history — it accounts for 35% of your credit score. Missing even one payment sets you back months. Set up automatic payments for at least the minimum due, or set a phone reminder on the due date.
The second factor is credit utilization — how much of your available credit you're using. If your limit is $500 and you carry a $400 balance, your utilization is 80%, which hurts your score. Keep it below 30% if possible. A $500 limit means use no more than $150 at a time. This is easier with a secured card where you control the limit by choosing your deposit amount.
Pay in full each month if you can. You avoid interest charges, keep your utilization low, and show the issuer you're a reliable borrower. After 6 to 12 months of perfect payments, you may be offered a higher limit or a conversion to an unsecured card. After 18 to 24 months, you become may be able to access for better cards with lower rates and no annual fees.
Frequently Asked Questions
Will getting a bad-credit card hurt my score even more?
The process itself (the hard inquiry) will lower your score by a few points temporarily. But if you use the card responsibly and pay on time, your score will start improving within a few months. The long-term benefit of building positive payment history outweighs the short-term dip from the inquiry.
Can I use a secured card at any store, or just certain ones?
A secured card works everywhere that accepts Visa or Mastercard (whichever network your card is issued on). It's a real credit card, not a store card. The "secured" part refers only to the deposit requirement, not where you can use it.
What's the difference between a bad-credit card and a prepaid card?
A prepaid card is not a credit card — you load money onto it first, then spend that money. It doesn't report to credit bureaus, so it doesn't help your score. A bad-credit credit card lets you borrow money (up to your limit) and build credit history by paying it back. Only a credit card helps rebuild your score.
How long does it take to move from a bad-credit card to a regular card?
Most issuers will convert a secured card to unsecured after 12 to 24 months of on-time payments. Your score may improve enough to may have access to for standard cards (with better rates and no annual fees) in 18 to 24 months, depending on how low your starting score was and what else is on your report.
Should I explore for multiple bad-credit cards at once to increase my chances?
No. Each process creates a hard inquiry that lowers your score. Multiple inquiries in a short time signal to issuers that you're desperate for credit, which makes them less likely to approve you. explore to one card, wait for a decision, and revisit your options in a few months if needed.