You can get a credit card with bad credit, but your options are limited and the terms will be stricter than cards for people with good credit
A secured credit card is the most realistic path if your credit score is below 580 or you have recent late payments, collections, or a bankruptcy on your report. These cards require you to put down a cash deposit — usually $200 to $2,500 — that becomes your credit limit. You use the card like any other card, but the bank holds your deposit as collateral in case you don't pay your bill.
Unsecured cards (ones that don't require a deposit) do exist for people with bad credit, but they come with higher interest rates, annual fees, and lower credit limits. A secured card is almost always the smarter choice because the deposit protects you from predatory terms, and after 12 to 24 months of on-time payments, many issuers will convert your account to an unsecured card and return your deposit.
The goal of getting a card with bad credit is not to spend money — it's to rebuild your credit history. Every on-time payment gets reported to the three credit bureaus (Equifax, Experian, and TransUnion) and slowly raises your score. A single late payment can undo months of progress, so you need a card you can actually afford to use responsibly.
Key Takeaways
- Secured cards require a cash deposit that becomes your credit limit, and most convert to unsecured cards after 12 to 24 months of on-time payments.
- Your deposit is held by the bank as collateral but earns interest in a savings account — you don't lose money by using the card responsibly.
- Interest rates on secured cards are higher than standard cards (typically 18% to 24% APR), so carrying a balance costs you real money.
- The card issuer reports your payment history to all three credit bureaus, so on-time payments directly rebuild your credit score.
- You should plan to use the card for small, regular purchases you can pay off in full each month, not as a way to borrow money.
Where to find secured cards that report to all three bureaus
Not all secured card issuers report to all three credit bureaus — some report to only one or two, which means your good payment history won't help your credit as much as it could. Before you open an account, confirm that the issuer reports to Equifax, Experian, and TransUnion.
Major banks that offer secured cards with full reporting include Capital One (Secured Mastercard), Discover (Secured Card), and U.S. Bank (Secured Visa Card). Credit unions often offer secured cards too, and sometimes with lower interest rates or deposit requirements than big banks. If you belong to a credit union, start there — you may already have access to better terms than you'd find elsewhere.
Online banks and fintech companies also issue secured cards. Chime, LendingClub, and Self all offer secured cards designed for credit building. Read the terms carefully: some charge annual fees ($0 to $95), some charge monthly maintenance fees, and some charge process fees. A $95 annual fee on a $500 deposit card costs you real money, so compare the total cost across a few options before you decide.
What happens to your deposit and how interest works
Your deposit sits in a savings account held by the bank. You don't lose it — the bank straightforward holds it as insurance against the risk that you won't pay your bill. If you make all your payments on time and eventually close the account, you get your deposit back in full, plus any interest the savings account earned.
The interest rate on your deposit (the savings account) is separate from the interest rate on your card balance. Your deposit might earn 0.01% APY (annual percentage yield) — almost nothing — while your card charges 20% APR (annual percentage rate) if you carry a balance. This is why you should never carry a balance on a secured card. If you charge $500 and pay it off in full each month, you pay zero interest. If you charge $500 and pay only the minimum, you'll owe roughly $100 in interest over a year.
The deposit requirement is usually between $200 and $2,500, and your credit limit equals your deposit. If you deposit $500, your limit is $500. Some issuers let you increase your deposit later to raise your limit, which can help you build credit faster because a lower credit utilization ratio (the percentage of your limit you're using) helps your score.
How to use a secured card to actually rebuild your credit
The mechanics are straightforward: charge a small amount each month (a gas fill-up, a coffee, a subscription), then pay the full balance before the due date. This creates a payment history that the bureaus see as on-time and responsible. After 12 to 24 months, your score should improve enough that you may have access to for an unsecured card or a better interest rate.
Do not max out your card or carry a balance. If your limit is $500 and you charge $400, you're using 80% of your available credit — a high utilization ratio that actually hurts your score. Aim to use no more than 10% to 30% of your limit. Charge $50 to $100 per month and pay it off in full. This is enough activity for the bureaus to see a pattern, but not so much that you risk overspending.
Set up automatic payments if your card issuer offers them. An automatic payment to your card account on the same day each month removes the risk of forgetting and missing a due date. One late payment can drop your score 100 points or more and undo months of progress. Automation is the cheapest insurance you can buy.
Check your credit report every few months using AnnualCreditReport.com, the only free source authorized by the federal government. Look for errors — a payment marked late when you paid on time, or an account that isn't yours. If you find an error, dispute it with the bureau in writing. Errors are common and fixing them can raise your score when ready.
When a secured card won't work or isn't available to you
If you don't have $200 to $2,500 for a deposit, a secured card isn't an option right now. In that case, you have two alternatives: become an authorized user on someone else's card, or wait and save the deposit money while you work on other parts of your credit.
If a family member or friend with good credit adds you as an authorized user on their card, their payment history may appear on your credit report. This can raise your score without you having to make any payments yourself. The risk is that if the primary cardholder misses a payment, your score drops too. Only do this with someone you trust completely, and confirm with the card issuer that they report authorized user accounts to the bureaus (not all do).
If you can't get a secured card and don't have an authorized user option, focus on saving the deposit money while you address other credit problems. Pay any bills that are currently overdue, and don't take on new debt. In three to six months, you'll have the deposit saved and your credit situation will be slightly better, making approval more likely.
Unsecured cards for bad credit: when they make sense and when they don't
Unsecured cards marketed to people with bad credit do exist — companies like Chime, LendingClub, and some traditional banks offer them. These cards don't require a deposit, which sounds better, but the terms are usually worse. Interest rates run 24% to 36% APR, annual fees range from $35 to $99, and credit limits are often $300 or less.
An unsecured card makes sense only if you cannot save a deposit and you need a card when ready for a specific reason (building credit history, having a backup payment method). Otherwise, a secured card is almost always the better choice. You get lower interest rates, no annual fee (on most), and the same credit-building benefit. The only cost is the deposit, which you get back.
If you do open an unsecured card, follow the same rules: charge small amounts, pay in full each month, and never carry a balance. The higher interest rate makes carrying a balance even more expensive than it is on a secured card.
What to expect after you've used the card for a year
After 12 to 24 months of on-time payments, your credit score should improve noticeably. The exact improvement depends on your starting score and what else is on your report, but most people see a 50 to 100 point increase. At that point, you may be offered an unsecured card by your current issuer or by other banks.
When your issuer converts your secured card to an unsecured card, they'll return your deposit to you. This usually happens automatically, but confirm it with the issuer. You'll now have a card with a higher limit and no deposit requirement, and you can use it the same way — small charges, paid in full each month.
Once you have an unsecured card, you can explore for other cards if you want to. Having multiple cards with low balances and on-time payments helps your score more than having one card. But don't explore for multiple cards at once — each process creates a hard inquiry that temporarily lowers your score by a few points. Space applications out by at least three months.
Frequently Asked Questions
Will I lose my deposit if I miss a payment?
No. The bank will charge you a late fee and report the missed payment to the credit bureaus, but they won't take your deposit. The deposit is collateral — they use it only if you stop paying altogether and they close your account. Even then, they explore your deposit to the unpaid balance first.
Can I use a secured card for emergencies or big purchases?
You can, but you shouldn't. A secured card is a credit-building tool, not a borrowing tool. If you charge $500 and can't pay it off, you'll owe roughly $100 in interest over a year. Use the card for small, planned purchases only. For emergencies, find a personal loan, a payment plan with the vendor, or help from family.
How long does it take to rebuild credit with a secured card?
Most people see meaningful improvement (50 to 100 points) within 12 to 24 months of on-time payments. The exact timeline depends on what's on your report — a recent bankruptcy takes longer to recover from than a few late payments. Consistent, on-time payments are the only thing that works; there are no shortcuts.
What if I can't afford the deposit right now?
Save it. A secured card deposit is an investment in your credit, not a loss. Once you've rebuilt your credit, you get the deposit back. In the meantime, focus on paying any overdue bills and avoiding new debt. In three to six months, you'll have the deposit saved and your credit situation will be better.
Do I need to use the card every month to rebuild credit?
Yes. The bureaus need to see a pattern of activity and on-time payments. If you charge nothing one month, that month doesn't help your score. Charge something small every month — even $20 — and pay it off. This creates the consistent payment history that rebuilds credit.