Advertiser Disclosure

Costly Subprime Credit Cards Offer Little Help, NerdWallet Study Finds

Aug. 22, 2017
Credit Card Data, Credit Cards, Promos
2017 Consumer Credit Card Report
At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.
More than 16 million Americans with subprime credit scores are carrying credit cards. Many of them do so in the hope of improving their credit and unlocking the benefits that come with a higher score. But a NerdWallet study finds that the cards they’re carrying may be costing them billions of dollars a year in unnecessary fees — and the subprime credit card market isn’t helping them get ahead.

The cards in question are unsecured cards marketed to those with bad credit by subprime specialist issuers, or SSIs. These cards tend to charge high fees — more than $150 a year, on average. At the same time, SSI cards rarely provide users with free access to their credit scores, a common benefit with regular cards that would be especially helpful to those working to improve their credit.

SSI cards also tend to have low credit limits that result in cardholders being close to maxed out at all times, which can be a drag on their credit scores. The average card for subprime customers has a balance that’s 94% of the card’s credit limit. By comparison, the figure is just 11% on the average card for consumers with the highest credit scores.

For more of our findings, see the full study.

About the author