NerdWallet's Best Credit Cards for Bad Credit of 2016
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NerdWallet’s Best Credit Cards for Bad Credit of 2016

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NerdWallet's Best Credit Cards for Bad Credit of 2016

Having bad credit or a very limited credit history makes getting a credit card tough. But secured credit cards are generally easier to get, and in some cases, they can help you improve your FICO score enough to qualify for an unsecured card. With a secured card, you make a cash deposit, which the issuer holds as collateral in case you don’t pay your bill. The deposit reduces the issuer’s risk, which is why secured cards can be an option for those with bad credit.

Here are the Nerds’ favorite credit cards for people with bad credit:

Best for low deposit

Capital One® Secured MasterCard®

Apply Now on Capital One's secure website

Pros

  • Qualify with limited / bad credit
  • No annual fee
  • No foreign transaction fee

Cons

  • No rewards
  • High APR

Bonus Offer

You may qualify for a credit line increase based on your payment history and creditworthiness with no additional deposit required

Annual Fee

$0

Intro APR Promotions

None

APR

  • APR: 24.99% (Variable)
  • Cash Advance APR: 24.99%, Variable

Card Details

  • No annual fee, and all the credit building benefits with responsible card use
  • Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
  • Your minimum security deposit gets you a $200 credit line
  • You may qualify for a credit line increase based on your payment history and creditworthiness with no additional deposit required
  • Easily manage your account 24/7 with online access, by phone, or using our mobile app
  • It’s a credit card accepted at millions of locations worldwide

Minimum deposit of $49, $99 or $200, depending on your credit. You can pay the deposit over time. Reports to the major credit bureaus. Annual fee is $0.

Benefits of the Capital One® Secured MasterCard®:

  • You don’t have to make your collateral deposit all at once. You can pay in installments, as long as the deposit requirement is met within 80 days of account opening.
  • You may be able to get a credit line of $200 with a deposit of only $49 or $99, depending on your credit. Most secured cards set your credit line equal to your deposit.
  • Over time, you may qualify for a higher credit line without putting down an additional deposit, a rare opportunity among secured cards.
  • The card’s $0 annual fee is low compared with other secured cards.

Drawbacks of the Capital One® Secured MasterCard®:

  • This card has a high interest rate: The ongoing APR is 24.99% (Variable).
  • The Capital One® Secured MasterCard® card doesn’t offer a rewards program. This is common for secured cards, but it’s possible to find those perks elsewhere.

The bottom line:

The Capital One® Secured MasterCard® is an excellent choice for people who are short on cash but want to work on building or rebuilding their credit. It offers flexibility when it comes to making a collateral deposit, and responsible use of the card could score you a higher credit limit without having to cough up additional funds. Also, because the card is issued by a major bank, it may be easier to upgrade to one of the bank’s unsecured cards later.

Best for large deposit

Wells Fargo Secured Visa Card

Apply Now on Wells Fargo's secure website

Pros

  • Qualify with limited / bad credit

Cons

  • Has annual fee
  • No rewards
  • High APR

Bonus Offer

None

Annual Fee

$25

Intro APR Promotions

None

APR

  • Purchase: 19.24%, Variable
  • Cash Advance APR: 24.24%, Variable

Card Details

  • N/A

Access a credit line of up to $10,000, based on your deposit. Reports to the major credit bureaus. Comes with free online credit education. The annual fee is $25.

Benefits of the Wells Fargo Secured Visa Card:

  • Your credit line matches your deposit — from $300 up to $10,000. This is a very high maximum for a secured card, which makes it easier to keep your credit utilization ratio low.
  • The Wells Fargo Secured Visa Card’s annual fee is $25, low for a secured card.
  • Your account will be reviewed periodically, and if you show responsible use, you may be upgraded to an unsecured credit card from Wells Fargo.

Drawbacks of the Wells Fargo Secured Visa Card:

  • As of December 2015, Wells Fargo doesn’t offer free credit scores to its credit card customers. This can make it hard to track your progress toward a healthier score.
  • The Wells Fargo Secured Visa Card doesn’t offer a rewards program.
  • The interest rate is high: The ongoing APR is 19.24% Variable .

The bottom line:

The Wells Fargo Secured Visa Card should be your first choice if you have extra cash for the collateral deposit. A higher credit limit means you can use the card regularly and still keep your credit utilization ratio down, and it provides a bigger safety net in the event of an emergency. Also, this card’s annual fee is low given its benefits, another factor that makes it one of the Nerds’ top picks.

Best for military

Navy Federal nRewards Secured

Apply Now on Navy Federal Credit Union's secure website

Pros

  • Qualify with limited / bad credit
  • No annual fee
  • 2.99% for 12 mos on transfers
  • No foreign transaction fee

Bonus Offer

None

Annual Fee

$0

Intro APR Promotions

Purchase: None

Transfer: 2.99% for 12 mos

APR

  • Min APR: 9.24%, Variable
  • Max APR: 18.00%, Variable
  • Penalty APR: Up to 18.00%, Variable

Card Details

  • Earn 1 point per $1 spent on purchases
  • N/A

Earn 1 point for every $1 you spend; points are worth as much as 1 cent each. Reports to the major credit bureaus. The annual fee is $0.

Benefits of the Navy Federal nRewards Secured:

  • The Navy Federal nRewards Secured earns rewards, which is very rare among secured credit cards.
  • The card’s annual fee is $0 — another unusual benefit for a secured credit card.
  • This card charges a comparatively low interest rate. 2.99% for 12 months on balance transfers, and then the ongoing APR of 9.24% - 18% Variable

Drawbacks of the Navy Federal nRewards Secured:

  • Only members of Navy Federal Credit Union can get the Navy Federal nRewards Secured. You must be a Department of Defense employee (including military members) or the family member of a Department of Defense employee to join.
  • The card’s minimum deposit is $500, which is high compared with other cards.

The bottom line:

The Navy Federal nRewards Secured is undoubtedly the Nerds’ secured credit card of choice — if you meet the eligibility criteria for Navy Federal Credit Union membership. It has a low cost, offers rewards, and reports activity to the major credit bureaus. This is a rare trifecta of benefits.

Best for upgrading

US Bank Secured Card

Apply Now on US Bank's secure website

Pros

  • Qualify with limited / bad credit

Cons

  • Has annual fee
  • No rewards
  • High APR

Bonus Offer

None

Annual Fee

$29

Intro APR Promotions

None

APR

  • Purchase: 19.24%
  • Cash Advance APR: 24.49%

Card Details

  • N/A

Reports to major credit bureaus. Provides access to a credit limit of up to $5,000, based on your deposit. You may be eligible for an upgrade to an unsecured card in as little as 12 months.

Benefits of the US Bank Secured Card:

  • The US Bank Secured Card allows a credit limit of up to $5,000, if you’re able to provide that amount for a deposit.
  • U.S. Bank will evaluate your account after 12 months. If you’ve been responsible with your card, you may be eligible to upgrade to an unsecured card. This is a faster opportunity to transition to unsecured credit than many other cards provide.
  • The card’s annual fee is $29, which is low compared with many secured credit cards.

Drawbacks of the US Bank Secured Card:

  • As of December 2015, U.S. Bank doesn’t offer free FICO score access to secured credit card holders. This could make it hard to track your credit progress over time. (The bank does offer lesser-used TransUnion scores for free.)
  • The ongoing APR is 19.24% — a pretty steep interest rate compared with some other options.

The bottom line:

This card is a first-rate choice if your main goal is to switch from a secured card to an unsecured card as quickly as possible. Since many secured cards force you to wait 18 months or more to transition, the US Bank Secured Card’s evaluation at 12 months could be a great opportunity for responsible cardholders.

Best for no annual fee

Digital Federal Credit Union Visa Platinum Secured Credit Card

Apply Now on Digital Federal Credit Union's secure website

Pros

  • Qualify with limited / bad credit
  • No annual fee

Cons

  • No rewards

Bonus Offer

None

Annual Fee

$0

Intro APR Promotions

None

APR

  • Purchase: 11.75%
  • Penalty APR: Up to 18.00%
  • Cash Advance APR: 11.75%

Card Details

  • N/A

The annual fee is $0. Comparatively low interest rate. Reports to major credit bureaus. Digital Federal Credit Union membership is required, but you can join with a one-time donation to an eligible charity.

Benefits of the Digital Federal Credit Union Visa Platinum Secured Credit Card:

  • The card’s annual fee is $0. This is hard to find in secured credit cards. This credit union’s membership requirements are relaxed, which means nearly anyone can apply for the card.
  • The Digital Federal Credit Union Visa Platinum Secured Credit Card charges a comparatively low interest rate: The ongoing APR is 11.75%.

Drawbacks of the Digital Federal Credit Union Visa Platinum Secured Credit Card:

  • This card doesn’t offer a rewards program.

The bottom line:

The Digital Federal Credit Union Visa Platinum Secured Credit Card is a primo choice if you don’t want to pay an annual fee but also don’t qualify for membership in Navy Federal Credit Union. It’s very cost-effective and will help you pump up your credit score because it reports to all three major credit bureaus.

Methodology

NerdWallet’s credit cards team selects cards in each category based on overall consumer value. Factors in our evaluation include fees, promotional and ongoing APRs, and sign-up bonuses; for rewards cards, we consider earning and redemption rates, redemption options and redemption difficulty. A single card is eligible to win in multiple categories.  

Last updated January 14, 2016.

Kevin Cash is a staff writer at NerdWallet, a personal finance website. Email: kcash@nerdwallet.com. Twitter: @kevin_cash.


Image via iStock. 

  • Colleen

    Thanks!

  • Brendan P

    untrue, Capital One secured is semi-secured…so a deposit of 49$ will give you an initial credit limit of 200$. i did that, and it was increased unsecured to 300$ within 6 months. everything else is correct. thanks for the info!

    • Hi Brendan,
      I believe (though correct me if I’m wrong) your initial deposit can be $49, $99 or $200, depending on your creditworthiness, but no matter what the initial deposit is, your credit line is $200, and after that, increases are case-by-case. Is there a scheduled credit limit increase, or similar program?

      • Joseph

        Hello,
        I actually had a cap one secured card, and the more you deposit, the more your credit limit can be. It has really helped me to build up my credit score, and now I have a “real” credit card from cap one!

        • Joseph

          You could also make deposits afterwards at anytime to increase your limit, although I have not had the need to do this. I deposited $200 and my initial credit limit was $351

  • Betty

    i have a capital one secured credit card sent $200 and have a $200 limit. what I do not like about them they keep your initial deposit for as long as you have the card so basically they never return your initial deposit until you CLOSE your account :( they used to return you money in one year back in 1999 but now they no longer do this until you actually close your acct.

  • Djbigrodney

    I, as all, appreciate your advice. It’s crazy how the govt. can bail out banks, and give them a new start, but the banks can’t give us a chance for a new start. Even if they offerred a $200 line of credit to help bring our credit scores up that would be wonderful. This is not the America our forefathers invisioned, this is the greedy, uncaring America the haves invisioned for the have nots.

  • aileen

    Thanks so much….I need to rebuild my credit and did not where to begin…now I do..thanks!

  • aileen

    Thanks so much….I need to rebuild my credit and did not where to begin…now I do..thanks!

  • Anks

    I have a credit score that differs in all three credit bureaus 578 Experian, 584 Equifax and 647 Transunion, it is from not paying off my student loans when I first graduated college around 2005/2006 I am since out of collection with my AES loans (very exciting) the other problems on my credit are mainly from the Early 2000’s from 2 credit cards and some medical payments. My questions to you are how do I know when these delinquencies will be off my credit report because I think they should all be off within the year (I understand it is 7 year but some are on here that seem as though should be gone) and 2 I have money to allocate a secure credit card I applied for a secured CD loan through PNC and was denied, I was told by the banker that a credit card is more what I need to help with my credit, do you think the Harley Credit Card would work for me?

    • It sounds like a secured credit card is perfect for your financial situation. The HD card is one of the best secured cards, because it has no annual fee, so I’d recommend that one. Congratulations on beginning the credit-building process!

  • heavyw8t

    I think my situation is somewhat unique. I lost my job in 2011, and just to work I took a low paying job that barely covered mortgage, car and utility payments. I have since had a complete financial turnaround due to some completely non-work related circumstances. Part of that is due to turning 62 and becoming eligible for social security. I have since paid off everything but my mortgage. At this moment in time I have no need for credit, yet it is a matter of personal pride to want to improve my scores. The three bureaus come in at 601, 616 and 620. I really want to get them back to 700 where they were when I bought my house 4 years ago. It seems the best way to do that is to acquire a credit card, use it for gasoline only, and pay it to $0 every month. Which card would you recommend for me?

    • I’d recommend the Barclaycard Rewards MasterCard for average credit. It’s meant for people in the 600 range, has no annual fee and gives 2x rewards on gas, groceries on utilities. You’re right on the mark in paying it off every month, but you don’t have to use it just for gasoline. The credit bureaus don’t know what you’re spending on, only that you’re making your payments responsibly and aren’t using too much of your credit line.

      Once you’ve had the card for a few months and used it responsibly, I’d ask for a credit increase and then apply for a department store credit card. You don’t have to use the department store card, but having more credit cards open helps build your score.

      • heavyw8t

        Oh, I know I could spend on the card anywhere. The reason I specified gasoline is that gas is something I would buy no matter what, and I’d know that however much I would spend is money I would have spent with a debit card or cash anyway, so my budget would not be upset at all. $200 spent and $200 paid off every month has to have a positive effect for me. Ideally I would like TWO cards, one for the 1st thru 15th, and the other for the 16th through end of month. 2 cards, 2 positive reports…..

        • Gotcha – in that case I’d still go with a store credit card (for diversity’s sake) and the Barclaycard Rewards Mastercard. Hope this helps!

  • Linda

    I applied for a Capital One card and was turned down. It said I had no credit report. What does that mean? I’m in a catch-22. I need to bid on some projects online and need to use PayPal or some other system. But I can’t use PayPal without a credit card. I’ve posted this question twice but it never shows up. Could you please help me out? Thanks, Linda

  • Linda

    I meant to add in my last comment that I looked into the H-D card but don’t have enough money to deposit to qualify – something like $300-500.

  • heavyw8t

    A lot of your responses include “your local credit union”. Don’t you have to have to be employed at some specific place to become a member of a credit union? I mean to belong to the UAW Credit Union, don’t you have to belong to UAW? Can you just walk into random credit unions and start applying for credit cards?

    • blackbeered

      In most cases, no allegiance required. That was yesteryear.

  • Melissa

    It seems to me every high school should have mandatory classes on managing your credit. One thing that bothers me are these sites where you can pull up your credit score for free. It claimed I had a 648 score, so I tried applying for a credit card and on my rejection letter it stated my score was 604. I applied to 2 different cards both telling the same thing. Which score is the right score? To me, the right score is the one these credit card companies are referring to. I switched to myfico.com and my scores are all over the place….556(604, no more), 654, 650. I’m just now starting to rebuild my credit and based on all the info, what’s really hurting me is I have no line of credit. Does your line of credit impact your score? If these are actually my scores, is a secured card still my only option? I’m a stay at home mom, so I have no income from a job. My husband makes a good income, but his credit is worst than mine. I want to apply for my own card, but wondered if that could’ve been another reason they denied me. Is there any way around that?
    Also, I heard its important to ask before applying for a secured card, to see if they report it on your credit as being “Secured”. I cant remember the exact reason, maybe just doesn’t look as good to lenders?

  • Melissa

    NerdWallet, can you please tell me what you think of a secured credit card from Navy Federal. They’re a credit union in my area, and I was going to take your advice and speak to someone in person. Is this card worth it?
    Gracias!

    • Navy Federal is great! The only concern is that you or a family member must be affiliated with the Department of Defense.

  • Melissa

    Oh my gosh, I’m thinking of a million questions now! So sorry everyone. When I got denied for the two credit cards (Capitol One and Chase un-secured), why couldn’t they refer me to another card they provided that would better suit my needs during the application process. If I act quickly, I don’t see why my same application and credit report cant be used towards one of their other cards with the SAME COMPANY. And by quickly I mean within 14 days. Do they really have to ding my credit again? This is when I think its unfair, they just didn’t want to work with me at all. I don’t care if my limit is $100, something is something.

  • Sasha

    I just discovered that I am on a joint credit card with my mom and she has almost maxed it out or paid late. This is impacting my credit score? Is thre a way for me to have my name removed from the account? If so, will this negatively affect my credit score? I don’t feel that I should be held responsible for a card I wasn’t aware existed.

    • Hey Sasha, I’m sorry to hear you’re having such trouble. If your mom’s making late payments, you’re better off getting your name off the account because it does indeed impact your credit score. Once you’re off the account, you can start rebuilding your credit with a secured credit card or secured share loan.

  • Hi Chantel, you can check out our picks for the best easy-to-obtain credit cards and find a no-fee card that suits your needs!

  • Jennifer Kelly

    Hello my name is jen and I am very worried about my credit. My current score is 532. I had a credit card with capital one but was unable to pay the bills. Now I’m at a point in my life where credit is needed to buy a house or car.if anyone can help me I will gladly appreciate it.

  • Desiree

    Shelby Hilliard I recommend you us bank we’ll depend we’re you lived they are in the north of us I have creditcard whith them and I don’t work my income is 700 a month and have available 2000 to used no fees just open a cheking account

  • janie

    My credit scores 715 but I have trouble because of identity theft. My VS and Macys are the only ones I’ve had since I had since about the time of incident and they’ve extended my credit lines due to my payment history. Now that I’m trying to build up my credit with out a dept store card I can’t get anyone to approve me because of lack of payments and all the bs associated with that card. Has anyone had a similar situation? What cards were you able to get? I’ve tried and tried disputing the fradulent card but Belk has gotten me nowhere.

  • jen

    Can you get a loan with bad credit based on the Cash flow of a business you are seeking to buy ?

  • natalie

    I am glad I didn’t pay the fee for first premier. I understand when u hv bad credit u will hv to pay for credit, but my friend got two capital one secured cards at $200 each about 4 months ago and his credit score sky rocketed. I got one and mine is barely moving. So I would suggest 2 capital one secured, or I just got approved for a $400 limit with credit one. so, in my opinion I think 2 cards will help more than one. And pay the payments on time everytime. Don’t over use the cards either bc that affects the score too.

  • I got the First Premier Card years ago… I have the Capital One Card but want to consolidate to get rid of the First Premier Card. I hate it! Any recommendations?

  • spencer

    Hi there. I’m spencer. I’m trying to rebuild my credit, I was approved for a cl with first premier bank with a 400 limit and u know how that works. …long story short. ..i have 12 medical bills collection on my account. I’m so confused and don’t know what to do, I was alo approved for a car loan from capital one which I’m making payments on time. It’s 4 months old now….my question is, will both capital one and first premier credit card be enough to rebuild my credit even though I have 12 medical bills collection on my credit file. ….will my scores even increased …Please email me any help. ..im so desperate to rebuild my credit. ..

  • ism

    For a secured card, does the deposit amount mean you can only use the credit card that much? Like if I have to deposit $200 for a secured credit card, can I use the card to pay a $250 expense? Or will it deny me the use of the card?

  • Sarah James

    Find top lenders offering Low Interest Bad Credit loans with easy online approval. Helpful to 186 out of 198 people. If you are in a similar situation to me, you’re a low income earner, in financial trouble or have a bad credit history and are looking for low interest loans then visit >>>>LowInterestBadCreditLoans(dot)com (Just replace the (dot) with the actual . )

  • Daylenis Santana

    Okay hi, I have a question! So I am 20 years old, I have a credit score of 515 … Unfortunately. I had a credit card, that I have not yet paid the full amount which I am planning to .. I did lose my job for a couple of months I recently got a new job that is part time and does not pay much! I had a debit card with capital one, I have a overdraft of $310 that I also have to pay. How can I fix my credit? Do I have to pay them off first? But when I do what happens? Does that repair my credit score or not? I am willing to do anything to fix my credit score. Thank you. Btw, i am not eligible for the capital one credit card.

  • spencer

    No…my card is unsecured from first premier bank. .oh I did got approved from capital one quicksilver creditcard and I have a auto loan with capital one as well so I’m pretty sure I’m on a right track. ..

  • Katie Short

    This article fails to mention that if you keep your NFCU card for a year, making regular payments, it will automatically switch to an unsecured card and your limit raised to the $1000 minimum if your secured limit was lower. Maybe they all do that, but it wasn’t something I was expecting. This card, plus paying off a few small debts (under $300 in total) helped raise a credit score over 100 points in one year. No, it’s not magic, but it’s been very helpful! Plus, the website is awesome and online payments are easy, even from an outside bank! Also, the terms were far superior to anything offered by USAA, if you’re in the position to look at those options.

  • Sophia Hall

    Find top lenders offering Low Interest Bad Credit loans with easy online approval. Helpful to 186 out of 198 people. If you are in a similar situation to me, you’re a low income earner, in financial trouble then visit >>>>> LowInterestBadCreditLoans(dot)com (Just replace the (dot) with the actual . )