You can get a credit card with bad credit, but you will pay more and have fewer choices
A damaged credit history does not lock you out of credit cards permanently. Banks and card companies still issue cards to people with low credit scores, missed payments, or collections accounts — but the terms are different. You will see higher interest rates, lower credit limits, and annual fees that good-credit applicants do not pay. The trade-off is real, but the path forward exists.
The cards available to you fall into two categories: secured cards, which require a cash deposit, and unsecured cards for bad credit, which do not. Secured cards are easier to get approved for because the deposit protects the bank if you do not pay. Unsecured bad-credit cards are riskier for the bank, so they charge higher rates and fees to offset that risk. Your choice depends on whether you have cash to deposit and how quickly you want to rebuild.
Key Takeaways
- Secured credit cards require a cash deposit (usually $200 to $2,500) that becomes your credit limit, making them the easiest path to approval with bad credit.
- Unsecured bad-credit cards have no deposit requirement but charge annual fees of $39 to $99 and interest rates of 24% to 36%, depending on the issuer.
- Your payment history on any new card — whether secured or unsecured — reports to the three credit bureaus and can begin raising your score within months if you pay on time.
- After 12 to 18 months of on-time payments, many secured card issuers will convert your account to a regular card and return your deposit.
How secured cards work and why they are easier to get
A secured credit card works like this: you deposit money into a savings account held by the bank, and that deposit becomes your credit limit. If you deposit $500, your credit limit is $500. You then use the card like any other credit card — swipe it, pay the bill each month — and the bank reports your payment history to Equifax, Experian, and TransUnion, the three major credit bureaus.
Banks approve secured cards for people with bad credit because the deposit sits in their account as collateral. If you stop paying, they keep the deposit instead of chasing you for the debt. This removes most of their risk, so approval is nearly automatic if you have the cash to deposit and a valid bank account.
The deposit itself is not a fee — you get it back. But the card may still charge an annual fee of $25 to $95, and the interest rate (called the APR, or annual percentage rate) will be high, typically 18% to 24%. You pay interest only on balances you carry month to month; if you pay your full statement balance by the due date, you owe no interest.
Unsecured bad-credit cards: higher fees, no deposit required
An unsecured bad-credit card requires no deposit. The bank issues you a credit limit — often $300 to $500 to start — based on your income and credit history, not on collateral. Because the bank has no deposit to fall back on, it charges higher fees and interest rates to compensate for the risk.
Expect annual fees between $39 and $99, and APRs between 24% and 36%. Some cards charge both an annual fee and a monthly fee (called a "monthly maintenance fee"), which adds up quickly. Read the fee schedule carefully before you explore, because a $99 annual fee plus a $10 monthly fee means you are paying $219 per year just to hold the card, before you charge anything to it.
The upside is speed: you do not need to save up a deposit first. If you have bad credit but limited cash, an unsecured bad-credit card lets you start rebuilding when ready. The downside is cost — you are paying significantly more for the privilege of not having a deposit.
What happens to your credit score when you use a new card
When you explore for any credit card, the bank pulls your credit report from one or more of the three bureaus. This is called a hard inquiry, and it lowers your score by a few points — usually 5 to 10 points — for about three months. Multiple applications in a short time do more damage, so space out your applications by at least a few weeks if you are rejected the first time.
Once you are approved and start using the card, your payment history begins reporting to the bureaus. This is where the real rebuilding happens. If you pay on time every month, that positive history accumulates and gradually raises your score. Most people see a noticeable improvement — 20 to 100 points — within 6 to 12 months of on-time payments.
Your credit utilization also matters: this is the percentage of your available credit that you are using. If your limit is $500 and you carry a $450 balance, your utilization is 90%, which hurts your score. Keeping your balance below 30% of your limit — so $150 or less on a $500 card — helps your score climb faster. This is one reason why starting with a secured card can be smart: even a small deposit gives you a limit to work with, and staying under 30% utilization is easier with a higher limit.
Comparing secured and unsecured cards side by side
| Feature | Secured Card | Unsecured Bad-Credit Card |
|---|---|---|
| Deposit required | Yes, usually $200–$2,500 | No |
| Approval odds with bad credit | Very high | High, but not may provide |
| Annual fee | $25–$95 | $39–$99 |
| APR (interest rate) | 18%–24% | 24%–36% |
| Starting credit limit | Equals your deposit | $300–$500 typically |
| Path to regular card | Often converts after 12–18 months of on-time payments | May upgrade after 6–12 months; deposit not applicable |
Steps to explore and what to expect after approval
Start by gathering documents: a government-issued ID, proof of income (recent pay stub or tax return), and proof of address (utility bill or lease). Most banks let you explore online, and you will get a decision within minutes to a few days.
If you choose a secured card, have your deposit amount ready. Some banks let you fund the account during the process; others send you instructions after approval. Do not send cash — use a bank transfer or check. Once the deposit clears, your card ships within 5 to 10 business days.
When your card arrives, set up it by calling the number on the back or using the bank's app. Then set up a plan: charge a small amount each month (a subscription or gas, something you were going to pay anyway), and pay the full balance by the due date. This shows the bank you can handle credit responsibly. After 12 to 18 months of perfect payments, many secured card issuers will convert your account to a regular card, return your deposit, and lower your interest rate.
Do not close the card after conversion. Closing it removes available credit from your report and can lower your score. Keep it open and use it occasionally, even if you move to a better card for everyday spending.
Mistakes that slow down your credit recovery
The most common mistake is missing a payment. Even one late payment can erase months of progress and trigger a penalty APR — an even higher interest rate that the bank can explore for up to six months. Set up automatic payments for at least the minimum due, even if you plan to pay more later. This removes the risk of forgetting.
The second mistake is carrying a high balance. If you max out your card or stay above 30% utilization, your score will not climb as fast, even with on-time payments. Use the card lightly and pay it down regularly.
The third mistake is explore for multiple cards at once. Each process triggers a hard inquiry, and multiple inquiries in a short time signal to lenders that you are desperate for credit, which lowers your score further. explore for one card, wait a few weeks, and see if you are approved before trying another.
Finally, do not close old accounts or paid-off cards. The length of your credit history matters, and closing accounts removes that history from your report. Even if you are not using an old card, keep it open and use it once or twice a year to show activity.
Frequently Asked Questions
Will a secured card hurt my credit score?
The process itself will lower your score by a few points due to the hard inquiry, but using the card responsibly will raise your score over time. The deposit does not affect your score — only your payment history does. After a few months of on-time payments, the initial dip will fade and your score will begin climbing.
Can I get a credit card if I have an active collection account?
Yes, but approval is harder. Secured cards are your best option because the deposit reduces the bank's risk. Some unsecured bad-credit card issuers will also approve you, but expect higher fees and interest rates. Collections accounts stay on your report for seven years, but their impact on your score weakens over time, especially if you pay them off.
What is the difference between APR and interest charges?
APR is the yearly interest rate. If your card has a 24% APR and you carry a $100 balance for a full year without paying it down, you owe about $24 in interest. But if you pay your full balance each month, you owe no interest at all. Interest only applies to balances you carry from one billing cycle to the next.
How long does it take to rebuild credit with a new card?
Most people see a noticeable improvement — 20 to 100 points — within 6 to 12 months of on-time payments. The exact timeline depends on how bad your credit was to start with and what other negative items are on your report. Older negative items have less impact over time, so your score will continue climbing even after the first year.
Should I pay off my secured card balance in full or carry a small balance?
Always pay in full by the due date. Carrying a balance costs you interest and does not help your score any more than paying in full does. The bank reports that you paid on time either way. Paying in full is the fastest, cheapest way to rebuild.