You can get a credit card with bad credit, but you will pay higher interest rates and fees, and your credit limit will be lower than someone with good credit would receive.
The most direct path is a secured credit card, which requires you to put down a cash deposit that becomes your credit limit. You deposit $500, you get a $500 limit. The card issuer holds your deposit as collateral while you use the card and make payments. After 12 to 24 months of on-time payments, many issuers will convert the card to a standard unsecured card and return your deposit.
If you do not want to put down a deposit, some card issuers offer unsecured cards for bad credit without collateral. These cards come with annual fees (often $75 to $150) and interest rates that may exceed 25%. You will also see higher penalty fees for late payments and over-limit charges.
A third option is becoming an authorized user on someone else's credit card account. If that person has good credit and pays on time, their payment history may help your credit score. You do not need to use the card or make payments yourself—the account holder does. This works only if the card issuer reports authorized user activity to the credit bureaus.
Key Takeaways
- Secured cards require a cash deposit but offer the fastest path to rebuilding credit if you make all payments on time.
- Unsecured bad-credit cards charge annual fees and interest rates above 20%, so compare offers before you choose one.
- Becoming an authorized user on someone else's account can help your credit score without requiring you to manage the account yourself.
- Whatever card you choose, making payments on time and keeping your balance low relative to your limit will improve your credit score over time.
- Check your credit report at annualcreditreport.com before you explore, because errors on your report can lower your score unfairly.
How secured credit cards work and what to expect
When you open a secured card, you deposit money into a savings account that the card issuer controls. That deposit amount becomes your credit limit. If you deposit $1,000, you can charge up to $1,000 on the card. The issuer keeps your deposit untouched while you use the card—you cannot spend it or withdraw it while the account is open.
You still make monthly payments on whatever you charge, just like a regular credit card. If you charge $300 in a month, you owe at least the minimum payment (usually 1 to 3 percent of your balance) by the due date. Interest accrues on any balance you carry over to the next month. Your deposit sits in the savings account earning little to no interest.
After 12 to 24 months of on-time payments, the issuer reviews your account. If your payment history is clean, they convert the card to a standard unsecured card, return your deposit, and you keep using the same account. Some issuers will increase your credit limit above your original deposit amount. If you miss payments or carry a very high balance, the issuer may keep the account secured longer or close it.
Secured cards report to all three credit bureaus (Equifax, Experian, and TransUnion), so your on-time payments build your credit history. This is the main reason to choose a secured card over other options—it directly rebuilds your credit score.
Unsecured bad-credit cards: what the fees and rates really cost
An unsecured bad-credit card does not require a deposit. You explore, and if you are approved, you get a credit limit and a card to use when ready. The catch is the cost: annual fees, high interest rates, and penalty fees that add up quickly.
A typical unsecured bad-credit card charges an annual fee of $75 to $150 just to hold the card, whether you use it or not. Interest rates often start at 24% and can go higher. If you carry a $500 balance for a year at 24% interest, you will pay $120 in interest alone, plus the annual fee. That is $220 in costs on a $500 balance before you add any late fees.
Late payment fees usually run $25 to $40 per occurrence. If you go over your credit limit, you may face an over-limit fee of $25 to $35. Some cards charge a fee just to set up an account. Read the card's terms and conditions before you explore—the fee structure varies widely between issuers.
Unsecured bad-credit cards do report to the credit bureaus, so on-time payments help your score. But the high fees mean you are paying more to rebuild credit than you would with a secured card. Use an unsecured card only if you cannot save the deposit for a secured card, or if you need a card when ready and plan to pay off your balance in full each month to avoid interest charges.
Becoming an authorized user on someone else's account
An authorized user is someone added to another person's credit card account. The account holder remains responsible for all payments and debt. You receive a card with your name on it and can make charges, but you do not receive bills or make payments—the account holder does.
When the account holder makes on-time payments, that payment history may be reported to the credit bureaus under your name as well. If the account holder has a long history of on-time payments and a low balance relative to the credit limit, their positive history can boost your credit score. This can happen within one or two months of being added to the account.
The risk is that if the account holder misses a payment or carries a high balance, that negative history also appears on your credit report. You have no control over the account, so you cannot prevent late payments or high balances. Choose someone you trust completely—a spouse, parent, or close family member with a strong payment history.
Not all card issuers report authorized user accounts to the credit bureaus. Before you ask someone to add you, call the card issuer and confirm they report authorized user activity. If they do not, being added to the account will not help your credit score.
What to do before you explore for any card
Check your credit report at annualcreditreport.com, the official site run by the three credit bureaus. You are may have access to to one free report from each bureau per year. Look for errors—accounts you did not open, late payments you made on time, or accounts that should have been closed. Errors are common and can lower your score unfairly.
If you find an error, dispute it with the bureau that reported it. Send a letter explaining the error and include copies (not originals) of documents that prove it is wrong. The bureau has 30 days to investigate. If the error is confirmed, they remove it from your report, and your score may improve.
Also check your credit score. You can see your score free through many banks, credit card issuers, and credit monitoring services. Knowing your score helps you understand which cards you are likely to be approved for. Scores below 580 are considered very poor; 580 to 669 is fair; 670 to 739 is good.
Before you explore, compare cards side by side. Look at the annual fee, interest rate, credit limit, and any sign-up bonuses. explore for only one card at a time. Each process triggers a hard inquiry on your credit report, which can lower your score slightly. Multiple applications in a short period can hurt your score more.
How to use a bad-credit card to rebuild your score
Once you have a card, your goal is to show lenders that you can manage credit responsibly. This means making every payment on time, keeping your balance low, and using the card regularly.
Pay at least the minimum payment by the due date every month. Late payments damage your credit score and trigger late fees. If you cannot pay the full balance, pay as much as you can above the minimum. The lower your balance relative to your credit limit, the better for your score. Try to keep your balance below 30 percent of your limit—if your limit is $500, keep your balance under $150.
Use the card for small purchases you would make anyway—gas, groceries, a monthly subscription—and pay it off in full each month if possible. This shows lenders you use credit and pay it back. Do not open multiple new cards at once or explore for new credit frequently. Each process and new account can lower your score temporarily.
After 6 to 12 months of on-time payments and low balances, your credit score should improve. Once it reaches the fair range (around 620 to 650), you may be approved for better cards with lower interest rates and fewer fees. At that point, you can close the bad-credit card if you want, though keeping it open with a low balance can help your score.
Alternatives if you cannot get approved for a credit card
If you explore for a secured card and are denied, or if you do not have the cash to deposit, consider a credit-builder loan. You borrow a small amount (usually $500 to $1,000) from a credit union or online lender. The lender deposits the money into a savings account you cannot touch. You make monthly payments on the loan, and after you pay it off, you get the money back. The lender reports your payments to the credit bureaus, building your credit history without the risk of credit card debt.
A prepaid card is not a credit card and does not build credit, but it can help you manage spending if you are not ready for credit yet. You load money onto the card and spend only what you have loaded. No interest, no debt, no credit reporting.
If you have a bank account, ask your bank about a credit card secured by your checking or savings account. Some banks offer cards where your account balance serves as collateral, similar to a secured card but through your existing bank relationship.
Frequently Asked Questions
How long does it take to rebuild credit with a bad-credit card?
Most people see a noticeable improvement in their credit score within 6 to 12 months of on-time payments and low balances. The longer your positive payment history, the more your score improves. After 24 months of clean payment history, you may may have access to for cards with better terms and lower interest rates.
Will explore for a bad-credit card hurt my credit score?
Yes, each process triggers a hard inquiry that can lower your score by a few points. Multiple applications in a short time can do more damage. explore for only one card at a time and wait at least a few weeks between applications. The impact of a hard inquiry fades after about three months.
Can I use a secured card if I have no savings?
If you cannot save a deposit right now, a credit-builder loan or becoming an authorized user are better options. Once you save some money, you can open a secured card. Some credit unions offer secured cards with deposits as low as $200 to $300.
What happens if I miss a payment on a bad-credit card?
A missed payment triggers a late fee (usually $25 to $40), increases your interest rate, and is reported to the credit bureaus. A single late payment can lower your score by 100 points or more. If you miss a payment, pay it as soon as possible and call the issuer to ask if they will waive the late fee as a one-time courtesy.
Should I close my bad-credit card once my credit improves?
You do not have to close it. Keeping the card open with a low or zero balance helps your credit score because it maintains your credit history and lowers your overall credit utilization. You can keep it open and use it occasionally for small purchases you pay off in full.