Yes, you can get a credit card with bad credit, but your options are limited and the terms will be less favorable than cards for people with good credit
Banks and credit card companies see bad credit as a sign that you have missed payments, carried high balances, or defaulted on past debts. They view you as higher risk. That does not mean they will not lend to you — it means they will charge you more to do it. You will encounter higher interest rates, lower credit limits, and annual fees that cards for good credit do not charge. The tradeoff is real, but the path forward exists.
The most common route is a secured credit card, which requires you to put down a cash deposit that becomes your credit limit. A $500 deposit gives you a $500 limit. You use the card like any other card, make monthly payments, and the deposit stays in the bank's account as collateral. After 12 to 24 months of on-time payments, many issuers will convert your account to an unsecured card and return your deposit. Secured cards are designed specifically for people rebuilding credit, and most major banks offer them.
Unsecured cards for bad credit also exist — cards that do not require a deposit. These typically charge annual fees between $35 and $99, interest rates between 24% and 36%, and come with low starting limits, often $300 to $500. The annual fee means you pay to carry the card whether you use it or not. These cards make sense only if you plan to use them actively and pay the balance down quickly, because the interest charges will otherwise exceed any benefit.
Key Takeaways
- Secured cards require a cash deposit but are the most straightforward path to approval with bad credit, and many convert to unsecured cards after consistent on-time payments.
- Unsecured bad-credit cards charge annual fees and high interest rates, making them expensive to carry unless you pay the balance in full each month.
- Your credit score, recent payment history, and current debt load all factor into approval, but bad credit alone does not disqualify you from either type.
- Using a new card responsibly — paying on time and keeping your balance well below the limit — is the only way to improve your credit score over time.
How secured cards work and why they rebuild credit
When you open a secured card, you deposit money into a savings account held by the card issuer. That deposit is frozen — you cannot touch it while the account is open. Your credit limit equals your deposit amount. You then use the card to make purchases, receive a monthly statement, and make payments just like a regular credit card.
The card issuer reports your payment history to the three credit bureaus: Equifax, Experian, and TransUnion. On-time payments build your credit score. Late payments or missed payments damage it, just as they would with any card. The deposit protects the issuer if you default, which is why they approve people with credit scores below 600 or with recent missed payments.
After 12 to 24 months of on-time payments, the issuer reviews your account. If your payment record is clean, they convert the card to unsecured status, return your deposit to you, and you keep the card with a higher limit. Some issuers do this automatically; others require you to request it. A few secured cards never convert, so check the issuer's policy before you explore. The conversion is not may provide — it depends on your behavior with the card.
Unsecured bad-credit cards: higher cost, faster approval
Unsecured cards for bad credit approve faster because there is no deposit to collect and verify. You can be approved within days. The tradeoff is cost. Annual fees range from $35 to $99 depending on the issuer. Interest rates typically fall between 24% and 36% — roughly double the rate someone with good credit would pay.
These cards make financial sense only in specific situations. If you plan to carry a balance, the interest charges will quickly exceed any benefit. A $500 balance at 28% interest costs you roughly $140 per year in interest alone, plus the annual fee. If you instead use the card for small purchases and pay the full balance each month, you avoid interest charges and only pay the annual fee once. That works if you have the cash flow to pay in full.
Unsecured bad-credit cards also report to the credit bureaus, so on-time payments help rebuild your score. But the high interest rate means missing even one payment becomes expensive fast. A missed payment triggers a late fee, a higher interest rate, and damage to your credit score. The risk-reward calculation is tighter than with a secured card.
What lenders look at beyond your credit score
Your credit score is not the only factor in approval. Lenders also examine your recent payment history — the last 12 to 24 months matter more than older damage. A missed payment from three years ago hurts less than one from three months ago. They look at your current debt load: if you already owe money on multiple cards or loans, a new card issuer may see you as overextended. They check your income and employment history to assess whether you can actually make payments.
Some issuers pull a soft inquiry first, which does not affect your credit score, to see if you meet their basic criteria. If you pass, they pull a hard inquiry, which does lower your score by a few points. Multiple hard inquiries in a short time signal to lenders that you are desperate for credit, which raises their risk assessment. Space out applications by at least a few weeks if you are considering multiple cards.
Being denied for one card does not mean you will be denied for all. Different issuers have different standards. A bank that requires a score above 650 might deny you, while a credit union or online lender with a 580 minimum might approve you. If you are denied, ask the issuer why — they are required to tell you. That feedback helps you decide whether to try another issuer or wait and rebuild your score first.
The cost of bad-credit cards and when they make sense
A secured card with a $500 deposit typically costs nothing beyond the deposit itself. You get your deposit back when the account closes or converts. Some secured cards charge annual fees of $25 to $50, which is lower than unsecured bad-credit cards but still a cost to factor in.
An unsecured bad-credit card costs $35 to $99 per year in fees alone. Add interest charges if you carry a balance, and the cost climbs fast. A $500 balance at 28% interest, with a $50 annual fee, costs you roughly $190 per year. That is 38% of your balance going to the card issuer instead of reducing what you owe.
Unsecured bad-credit cards make sense if you need a card when ready and cannot wait for a secured card approval, or if you are certain you can pay the full balance each month and avoid interest charges. They also make sense if you have already tried secured cards and been denied — some people do not meet even the deposit requirement due to very low income. In that case, an unsecured card with a low limit and a plan to pay in full is better than no card at all.
Building credit with a new card: what actually works
Opening a new card does not when ready improve your credit. Your score may actually drop slightly when the issuer pulls a hard inquiry and opens a new account. Over time — typically 6 to 12 months — on-time payments and low balances rebuild your score.
The most effective strategy is to keep your balance well below your credit limit. Lenders look at your credit utilization ratio, which is the percentage of your available credit that you are using. If your limit is $500 and your balance is $450, your utilization is 90%, which signals financial stress. If your balance is $50, your utilization is 10%, which signals control. Aim to keep utilization below 30% on every card you own.
Make every payment on time, even if it is just the minimum. A single late payment can drop your score by 100 points or more. Set up automatic payments if you struggle to remember due dates. After 6 to 12 months of perfect payment history, you will see your score improve. After 24 months, you become may be able to access for better cards and better rates.
Alternatives if you cannot get approved for any card
If you are denied for both secured and unsecured cards, a few other paths exist. A credit-builder loan is a small loan, usually $300 to $1,000, that you take out from a credit union or online lender. The money goes into a savings account that you cannot access until you repay the loan. You make monthly payments, and the lender reports your payment history to the credit bureaus. After you repay, you get the money back and your credit score has improved. There is no interest charged if you make on-time payments.
Becoming an authorized user on someone else's credit card is another option. If a family member or friend with good credit adds you to their account, their payment history may be reported under your name, which can boost your score. This works only if the primary cardholder makes on-time payments and keeps the balance low. If they miss payments, your score suffers too.
A secured savings account at a bank or credit union can also help. You deposit money and the bank lends it back to you at a low interest rate. You make monthly payments, and the lender reports to the credit bureaus. It is slower than a credit card, but it builds credit with no risk and no annual fees.
Frequently Asked Questions
Will getting a bad-credit card hurt my credit score?
Yes, initially. The hard inquiry and new account will lower your score by a few points. Over the next 6 to 12 months, on-time payments will raise it back up and then higher. The short-term dip is worth the long-term gain if you use the card responsibly.
How long does it take to convert a secured card to unsecured?
Most issuers convert after 12 to 24 months of on-time payments. Some do it automatically; others require you to request it. Check your card's terms before you open the account, because a few secured cards never convert. If conversion is important to you, choose an issuer that does it automatically.
Can I use a secured card to rebuild credit if I have recent late payments?
Yes. Recent late payments hurt your score, but they do not disqualify you from a secured card. The deposit protects the issuer. What matters now is your behavior going forward — on-time payments from this point on will gradually outweigh the old damage.
What is the difference between a hard inquiry and a soft inquiry?
A hard inquiry happens when a lender pulls your credit report to make a lending decision. It lowers your score by a few points and stays on your report for two years. A soft inquiry is a background check that does not affect your score. Issuers often do a soft inquiry first to see if you meet basic criteria.
Should I get a secured card or an unsecured bad-credit card?
A secured card is usually the better choice. It has lower or no annual fees, lower interest rates, and is designed for credit rebuilding. An unsecured bad-credit card makes sense only if you need when ready approval, cannot afford a deposit, or are certain you will pay the full balance every month.