An unsecured card is often a good choice for those who can’t afford to make a $200 secured deposit right away to get a secured card. But because there’s no deposit, this type of card often comes with a host of fees. Finder’s credit card experts spent hundreds of hours comparing over 50 unsecured cards for bad credit and chose the top five that had the lowest fees, reported to the three major credit bureaus, and boasted with additional perks.
In 2020, Petal came out with a new card that is geared toward people with a 550 credit score and higher, which is right on the cusp of bad and fair. This is the only card in this category that doesn’t charge an annual fee.
Our top picks for unsecured credit cards for bad credit
These cards offer some excellent perks considering they’re designed for people with no or poor credit.
The Petal® 1 "No Annual Fee" Visa® Credit Card is Petal's newest card for credit-building. This card is designed so that those with a prior history of poor credit can apply and potentially qualify. While this card doesn't share the NO FEE structure of the Petal 2, it does carry no annual fee and requires no security deposit, making it a strong choice for rebuilding credit without taxing your bank account.
No annual fee. You won't pay an annual fee to use this credit card. This is a rare feature for an unsecured card for bad credit.
High potential credit limit. The Petal 1's minimum credit limit starts at $500 and goes as high as $5,000. Another rare feature for this type of card that's unmatched by similar cards.
Reports to all three credit bureaus. Petal will report your credit activity to Equifax, Experian and TransUnion. This is all you need to build your credit.
High APR. The Petal 1 comes with a purchase APR of 19.99% to 29.49% variable. But you can avoid this fee if you always pay your balance before it's due.
No welcome offer. You don't get to earn a bonus of any kind after you sign up.
Annual Fee
$0
Purchase APR
19.99% to 29.49% variable
Balance transfer APR
N/A
Welcome offer
N/A
Rewards
2% - 10% cash back from select merchants
Credit One Bank® Platinum Visa® for Rebuilding Credit
The Credit One Bank® Platinum Visa® for Rebuilding Credit is a basic starter credit card that's aimed at helping those with bad credit recover. This card earns 1% cash back on all purchases and offers flexible payment due dates, helping you to consistently make payments on time.
Prequalification. See if you prequalify for the card without taking a hit on your credit score.
Cash back. Get one of the four cashback reward programs based on your creditworthiness 1% cash back on eligible gas, groceries, mobile phone, internet or TV purchases.
Free credit score access. Track your credit-building efforts with monthly access to your Experian credit score.
Annual fee. Pay anywhere from $0 to $99 annually, depending on your creditworthiness. Starting from the second year, some accounts will pay the annual each month, divided into 12 equal portions. Other accounts will be billed annually.
Authorized user card fee. Pay $19 annual fee for authorized users. Most credit cards don't charge any fees for additional cards.
Annual Fee
$75 intro annual fee for the first year ($99 thereafter)
Purchase APR
23.99% variable
Balance transfer APR
N/A
Welcome offer
N/A
Estimated welcome offer value
Rewards
1% cash back rewards on eligible gas, groceries, mobile phone, internet, cable and satellite TV services
While the Indigo® Platinum Mastercard® Credit Card may carry a $99 annual fee after the first year, the card does allow you to prequalify which can help avoid the credit ding of a hard pull on your score. Plus, depending on your credit score, Celtic Bank may waive the annual fee entirely. Just take care to make your payments on time: the Indigo Platinum sports a high penalty APR of 29.9% and late fees of up to $40.
Potential first-year $0 annual fee. Depending on your credit profile, you could get a $0 annual fee for the first year. After the first year, your annual fee will be $99.
Get prequalified. See your chances of approval without applying for the card. This won't affect your credit score.
Reports to credit bureaus. Celtic Bank reports your card activity to the three major credit bureaus: Equifax, Experian and TransUnion.
You may be charged an annual fee. Depending on your credit, you may need to pay an annual fee of either $0, $59, or $75 for the first year and $99 thereafter..
High APR. You'll receive a 24.9% fixed APR on purchases.
This is a rare card among unsecured cards for bad credit because it comes with no cash advance fees during your first year of card membership. For those who need to make cash advances, this could be the right card.
No cash advance fee. Get $0 fees for cash advances during your first year of card membership. After that, a 5% fee will apply with a $5 minimum.
Build credit. This card reports your activity to Experian, Equifax and TransUnion. With timely payments, you can build your credit.
Prequalify before you apply. Avoid a hard pull on your credit with prequalification. Plus with prequalification, you'll see which of the two annual fees you'll pay for the card before you apply.
Annual fee. Depending on your credit score, you could pay $99 annually or $75 for the first year and $99 thereafter.
Foreign transaction fee. Every transaction made abroad or online with a foreign merchant will cost you 1% of the amount.
Annual Fee
$59 to $99
Purchase APR
24.9% fixed
Balance transfer APR
N/A
Welcome offer
N/A
Estimated welcome offer value
Rewards
N/A
How to compare unsecured credit cards for bad credit
There are some features to keep in mind when you compare unsecured cards for bad credit, including:
Reporting to credit bureaus. To build credit, the card you’re approved for must report your card activity to all three major credit bureaus — TransUnion, Equifax, Experian. Otherwise, you will never build your credit.
Annual fee. Unsecured cards are expensive. That’s because they risk providing you with credit that you may fail to pay off. Expect to pay anywhere between $49 and $300 each year for an unsecured card for bad credit.
Other fees. Check the card’s terms and conditions before you submit your application to know what you’re getting in to. Some unsecured cards for bad credit are known to have a host of hidden fees.
5 things to know about unsecured cards for bad credit
Here’s what you need to know to better understand this type of cards:
Unsecured cards for bad credit don’t require a deposit. This is useful for those who can’t afford to make a deposit of $200 or $300 to get a secured card for building credit.
Almost every unsecured card for bad credit comes with an annual fee. Expect to pay anywhere from $49 to $300 annually, depending on which card you choose.
Is guaranteed approval a thing? You could find cards with guaranteed approval but they’re likely to come with a lot of fees to make up for it.
Do all cards do a credit check? Once you apply, yes. However, a decent number of cards come with a prequalification tool. You can choose to apply only if the chances of approval are high.
Do they come with rewards? Some of them do, but in most cases it depends on your creditworthiness.
Compare unsecured credit cards for bad credit
Check out the options for building your credit with an unsecured credit card.
What if you’re not approved?
If you’re rejected for an unsecured credit card, you’ll want to do the following:
Call the credit card company’s reconsideration line. This number is usually printed on the rejection letter the bank sends you 7 to 10 days after it makes its lending decision. Ask the customer service representative why you were denied and if you can work with them to reconsider the bank’s decision.
Consider applying for a secured credit card. Secured credit cards require a cash deposit upfront that acts as the credit line for the card. While these tend to have smaller credit limits or unfavorable fees, lenders are more likely to approve someone with bad credit for a secured card because they can apply the collateral to the card’s balance if you miss a payment. Secured credit cards act similarly to an unsecured card on your credit report, as long as the lender reports to all three credit bureaus, so make sure to keep up on your payments. Keep in mind that late payments will still hurt your score even if your cash collateral is used to cover a missed payment. Check out our guide to secured credit cards for more information.
Don’t reapply too quickly. When you apply for a credit card and are rejected, this can show up on your credit report as a hard pull, which can put a small dent into your credit score. Wait a few months to apply for another card to avoid a large credit score drop.
Work on paying off your existing debts. Anything you can do to bolster your credit score while you wait to reapply will improve your chances of approval. You have quite a few ways to build credit without a credit card, so make a plan and stick to it.
Further improving your credit
If you’re approved for an unsecured or secured credit card, you’re already on track to improving your credit score. Make sure to manage your credit card properly by making regular, on-time payments. Keep your balances low and make sure to pay off any accounts in collections. Check out our guide to improving your credit score for more information.
It’s also a good idea to keep an eye on your credit score. Most credit card issuers give you free access to your FICO score. If you don’t yet have a credit card, free credit monitoring software like Credit Sesame will give you free access to your credit score and history.
Many providers will check your credit, and you could be declined if your score is too low. If you’re denied, try applying for a different credit card with a provider that doesn’t look at your credit history.
Bottom line
Even if you have bad credit, you can still find unsecured credit cards out there that may be a good fit for your financial situation. While these credit cards typically don’t offer high credit lines or many perks, using them responsibly and paying off your balance each month will help you qualify for better credit cards.
Steven Dashiell is a writer at Finder specializing in all things credit cards. With more than 300 articles under his belt, he aims to help readers embrace credit cards and maximize their rewards. Steve is studying to become a Certified Educator in Personal Finance, and is a frequent face on Finder’s YouTube channel, offering the latest in credit card hacks and advice. His expertise has been featured on numerous outlets, including U.S. News & World Report, Time, CBS, Fox Business, Lifehacker, Martha Stewart Living and more.
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