Do Major Banks Offer Credit Cards For Bad Credit?

December 30, 2016, Written By Jason Steele
Do Major Banks Offer Credit Cards For Bad Credit?

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Have you ever wondered if there are major banks that offer credit cards to people with bad credit? There are many reasons why millions of Americans have bad credit, including divorce, foreclosure, medical bills, and job loss. And other times, people have bad credit after getting into trouble with debt, and failing to make their monthly payments. Thankfully, there are credit cards offered to people with a bad credit history.

The types of banks that offer credit cards to people with bad credit

There are actually quite a few credit cards offered to people with bad credit. Many of these credit cards are issued by relatively small institutions that specialize in offering products to people with bad credit. On the other hand, there are also several major banks that also offer these kind of cards.

But while the smaller card issuers may offer standard unsecured cards, most of the cards issued by major banks to people with bad credit are secured cards.

How secured cards work

A secured card is much like a standard, unsecured card, except you must first submit a refundable security deposit before your account can be opened. Typically, your available credit is determined by the amount of your refundable security deposit.

However, a secured card account works just like a regular, unsecured card. You will receive a statement each month, and you must make a payment. And if you choose to carry a balance, then you will incur interest charges at the standard rate. Otherwise, no one will know you are using a secured card. Just like any other card, your payment history is reported to the three major consumer credit bureaus. Many secured card users are able to qualify for a standard, unsecured card after making on-time payments for a year.

Also, secured credit cards offer many of the same features and benefits of standard, unsecured cards. For example, secured cards can offer purchase protection policies such as extended warranty coverage and a damage and theft protection policy. Secured cards can also feature travel insurance policies such as auto rental collision damage waivers.

Here are two cards from major issuers that you can get, even if you have bad credit:

Capital One® Secured Mastercard®

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The Capital One Secured Mastercard is offered to applicants with any credit history, including poor credit. To open an account, you must go through a three-step process. First, you complete and submit your application. Upon approval, you will then be notified of the amount of the refundable security deposit that you will have to submit, which will be $49, $99 or $200 based on your creditworthiness. As a result, you will receive a credit line between $200 and $3,000.

Finally, you must submit your refundable security deposit before receiving your card within two to three weeks. Once received, this card works much like any other credit card. This card has a standard interest rate of 26.99% (Variable) that applies to purchases, cash advances, and balance transfers. It also includes most of the same features and benefits of Capital One’s other cards including extended warranty, auto rental, and travel accident insurance, as well as travel assistance, roadside assistance, and price protection. You receive complimentary access to Capital One’s Credit Tracker app. There is no annual fee for this card, and no foreign transaction fees.

Citi® Secured Mastercard®

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The Citi Secured Mastercard is offered to new applicants with little or no credit history. To open an account, you must first submit a refundable security deposit between $200 and $2,500 at the time you submit your application. Once your security deposit is received and you are approved for a new account, then your credit limit will be set according to the amount of your security deposit. It will be held in a collateral holding account for 18 months and will not earn interest. You will still have to make monthly payments, and your security deposit will only be used is your account is in default.

Benefits include worldwide automobile rental car insurance and travel accident insurance. You also get trip cancellation and trip interruption coverage when you use your card to purchase travel reservations. When shopping, your purchases will be covered by an extended warranty policy and a damage and theft protection plan. You also receive access to Citi’s Price Rewind service which can automatically refund the difference when a lower price is found on an eligible item within 60 days of purchase.

The standard APR for purchases is  24.74%* (Variable) . There is no annual fee for this card, but there is a 3% foreign transaction fee imposed on all charges processed outside of the United States.

Bottom line

If you have bad credit or a limited credit history, you can still have a credit card account from a major bank. By considering a secured card, you can get the credit you need from a name that you trust.

The information contained within this article was accurate as of December 30, 2016. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Jason Steele

Jason Steele is a freelance journalist and an expert on the credit card industry. He contributes to several of the top personal finance sites, and his work is syndicated to mainstream outlets such as MSN Money, Yahoo! Finance, and Business Insider.
View all posts by Jason Steele