Top 6 Cards For Bad Credit With No Deposit
If you have bad credit you may have run into an issue where you’ve been declined for a card when applying. This can be frustrating because having a credit card and using it properly can be a great credit-building tool. It may seem like you are at a loss in your search for a credit card, but don’t worry, there are options for you out there. Bad credit scores may hinder your ability to be approved for some unsecured credit cards but there are cards that you may be approved for, even without having to put down a security deposit.
Which Cards Require a Security Deposit?
If you’ve done any searching for credit cards up to this point you may have seen the term “Secured Card” pop up in your research and wondered what that really meant. A secured credit card is one that requires you to put a security deposit down to open your account. This amount can range from a couple of hundred dollars up to a few thousand, depending on the card. The amount that you put down for your security deposit becomes your credit line. From there you can use your card just like any other credit card on the market. Secured cards also report your credit usage to credit bureaus, so it is important to use your card responsibly.
Some secured cards have industry-low interest rates. This is because the risk level for the bank is lower since you have to provide a deposit upfront to open your card account. This is great if you are trying to build your credit score, especially if you plan to carry a balance on the card month to month. The lower interest rates will mean that you will pay less in interest payments, which will save you money in the long term if you do end up with a monthly balance.
You may be in a situation where you do not have the cash on hand to put a security deposit down to open a credit card. There are credit cards that are meant for people with bad or limited credit that do not require a security deposit
What If I Can’t Afford a Security Deposit?
If you can’t afford a security deposit required by secured cards, you may be able to get an unsecured credit card, designed for those with bad credit. These cards will not require you to put down a security deposit but typically come with higher interest rates. You’ll have to assess your needs and spending habits to decide if a secured or unsecured card is better for you. If you plan to carry a balance month to month the interest payments on an unsecured credit card could end up costing you more in the long run. If you do not plan to carry a balance month to month then you may not have to worry about the interest rate on the card.
Some cards offer the ability to see if you pre-qualify. If you go through the pre-qualification process you give the bank access to conduct a soft inquiry on your credit history. Soft inquiries do not show up on your credit score, which is great if you are unsure whether or not you would qualify for a card. It allows you to get an idea of your ability to get approved for the card without actually applying. Pre-qualifying does not guarantee your approval if you apply though. Once you go to apply the bank will conduct a hard inquiry on your credit history and get a full assessment of your qualifications. At that time the bank will make the decision on whether or not to approve you for the card. Even though it does not guarantee approval for the card, it is still a great tool to use if you want to apply for a card but are unsure if you will be approved. If you fill out the pre-qualification form and you are not pre-qualified you know that you should not apply for the card, which saves you from having a hard inquiry completed on your credit history for a card you would not likely get approved for.
Make the most of your card
You need to make sure when you get a card that you use it to build your credit and not hurt it. If used improperly, your credit card can make your credit worse than it already is. There are a few ways to ensure that you are using your credit as a tool to help you build your credit:
Make On-Time Monthly Payments – You should always aim to pay your monthly bill on time, even if all you pay is the minimum payment. Late payments can hurt your credit and make it more difficult to get approval on other loans in the future. Depending on your card, you may be able to set up an automatic payment every month. This can help ensure that you never miss a payment.
Keep Your Balance Low – If you have bad credit and get approved for a credit card use it as a tool to better your credit. Only make purchases that you know you would normally make, like gas for your car, and pay it off every month. Creditors like to see that you keep your balance below 30% of your available credit, only making normal purchases like gas should keep you below that percentage.
Don’t Apply for Multiple Credit Lines at One Time – When you apply for credit the creditor completes a hard inquiry on your credit. Only having one or two hard inquiries may not hurt your credit but if you apply for a hand full of credit cards and a number of personal loans at the same time it can have a negative effect on your credit score. Instead of applying for numerous things all at once, narrow down your options to the ones that fit your credit needs best and only apply for your top one or two options.
Have a Good Credit Mix – Creditors like to see that you know how to manage different types of credit. Having a car loan, mortgage and a credit card may be better for your credit score than only having three credit cards will. This does not mean that you should go out and get different types of credit just to better your credit mix. Subjecting yourself to more credit payments on a monthly basis is not a good plan if you are trying to better your credit score.
Using your credit card as a credit-building tool can set you up for better loans and credit card opportunities in the future.
The Top 6 Cards for Bad Credit With No Deposit
If an unsecured credit card for bad credit fits your needs the best, we’ve compiled a list of our top cards below and why we think they are good options. Take a look at them to see if any of them fit your needs to best and be sure to check out the rates and fees for each, keeping note of the APRs, Annual Fees and any other fees the card may have before you apply.
Reflex Mastercard® Credit Card is a great card if you have bad credit and would like to avoid putting down a full deposit on a secured card. It offers a pre-qualification form so that you can get an idea of your approval odds before you apply. If you are not approved for the fully unsecured version of the card you may be asked to put down a portion of your credit line as a deposit. Like many unsecured credit cards for bad credit, the Reflex Mastercard does have it’s fair share of fees, but that is part of the process for rebuilding your credit. Be sure to review the rates and fees of any card before applying so you understand the associated fees, but this card is a good option to help you build your credit.
First Access Visa® Credit Card has an easy and secure online application. You will be charged a program fee but only if you are approved for the card. Once approved, you will have access to a certain credit limit, and your timely payments will be reported to all three credit bureaus. You may be able to receive your card more quickly with optional Expedited Processing (additional fee applies).
Perks of the card include fraud protection for lost or stolen cards and mobile account access. Your account history is also reported to the three major credit bureaus.
Milestone® Mastercard® – Less Than Perfect Credit Considered is offered to applicants with bad credit, and has very reasonable terms for a product of this type. Cardholders receive all of the benefits of the Mastercard including the Mastercard Global Service program, which is available 24 hours a day, 365 days a year. It offers emergency replacement lost or stolen cards, emergency cash advances, ATM location services and account-related information including any applicable card benefits.
The standard interest rate is 24.90%, and there is a 25-day grace after the close of each billing cycle during which cardholders can avoid interest by paying their balance in full. The annual fee for this card is $35-$99*. The fee you are assessed will depend on your credit worthiness.
Credit One Bank® Unsecured Visa® for Rebuilding Credit allows you to pre-qualify without harming your credit score. Once approved, fees and interest rates will vary based on your credit. The APR on purchases can range from 17.99% to 23.99% Variable, and are slightly higher for cash advances. The fees for cash advances also vary. Those with lower credit will be charged $5 or 8%, whichever is greater, on cash advances, and those with better credit will be charged $10 or 3%, whichever is greater. The annual fee will range from $0 - $99, depending on your credit.
Credit lines will range between $300 and $3,000, depending on the applicant’s credit, and timely payments mean your credit line could increase, though additional fees may apply. Perks of the Credit One Bank Unsecured Visa include 1% cash back rewards, $0 fraud liability, the ability to change your due date, and a mobile app that allows you to manage your account. Additionally, Credit One reports to all three major credit bureaus, and you can monitor your Experian credit score online for free.
Whichever card you decide to apply for, be sure to use it properly so that it has the best chance of helping your credit score for the future.