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Credit cards like Capital One
Capital One offers a range of "credit builder" cards catering to those with limited or damaged credit histories. It's not the only provider doing this.
A less than perfect credit history can make it harder to secure finance, including loans and credit cards. However, specialist card issuers like Capital One aim to provide a way around this, with tailored financial products that can help build or rebuild a positive credit history.
As you might expect, these cards tend to come with lower credit limits and higher APRs, but there’s good news too:
Like most cards on the UK market, if you pay your balance off in full each month, you usually won’t incur any interest at all, so a high APR might not mean anything to you in practice. Watch out for exceptions to this rule, such as non-sterling transactions or cash advances (withdrawing cash on the card).
The acceptance criteria for these cards tend to be more lenient and it’s normally possible to find out before you apply (and without hurting your credit score) whether or not you’re likely to be approved, thanks to the prevalence of “soft search” facilities.
Annual or monthly account fees are very rare in this space and finally, credit limits are often subject to review more frequently and within a short time of holding the card.
Comparison of alternatives to a Capital One card
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Key considerations for credit cards like Capital One
Credit builders can be a useful tool, if they’re used correctly. Aim not to carry a balance from month to month: if you do, you’ll stand to pay a hefty amount in interest. It can be tempting to make only the minimum required payment each month (and your card issuer might love this), but that will cost you much, much more in the long run.
Due to the higher rates that apply to cards such as these, it’s often smart to think of them as a “stepping stone” product to finance agreements with better terms. In other words, if you take out a credit builder, use it sensibly and then, when you’re able, switch to a card (or other financial product) with lower rates.
If you miss a repayment, you’ll most likely incur a penalty fee, pay additional interest and damage your credit record further. Pretty much every card issuer now lets you set up a direct debit for repayments and lets you choose to set this up for either the minimum required sum, a fixed amount or the full balance. It’s a smart idea to do this as you’ll safeguard your credit record.
Credit builder credit card providers
A list of credit card issuers known for helping consumers build or rebuild positive credit history.
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