Good cards for people with bad credit

If you don't qualify for the best on the market, don't settle for the worst, which come with big upfront fees.

By Stacy Johnson Apr 23, 2012 10:38AM

This post comes from Jason Steele at partner site Money Talks News.

TMoney Talks News on MSN Moneyhe new Consumer Financial Protection Bureau recently backed off from a fight to prevent credit card companies from charging fees before you open an account with them, according to The New York Times. These so-called "application fees" sidestep the Credit CARD Act of 2009, which limited the fees banks could charge to 25% of your credit limit in the first year.

Image: Creditcard Computer (© Photographers Choice RF/Getty Images)First Premier Bank went to court and successfully defended its right to charge larger upfront fees, arguing it would "suffer irreparable harm" if it had to stop collecting its $95 upfront fee. But its card, aimed at people with poor credit, makes its customers suffer. They also get hit with:

  • A $75 annual fee.
  • A monthly service fee that adds up to another $75 a year.
  • a 36% interest rate.

There are much better cards for people with bad credit. They're called secured cards. (Post continues below.)

How secured cards work

These cards require you to submit a security deposit, which guarantees you a line of credit for that amount. For example, if you want a $500 line of credit, you'll deposit $500 with the issuer, which essentially insures your account. Since the issuers are taking little risk, they're more likely to approve applications for those with bad or no credit. (Estimate your credit score for free.)

Once you have the card, you're issued statements, pay bills and build credit like any other cardholder. When your account is closed, your security deposit is refunded -- sometimes with interest. While not everyone will qualify for every secured card, there are still plenty of great cards from mainstream banks that accept nearly everyone.

Check out these secured cards, all from well-known banks:

  • Orchard Bank Classic Card. A subsidiary of HSBC Bank, Orchard claims all applicants who provide a security deposit will be approved. If you can prove your identity, it doesn't matter what your credit score is or if you've declared bankruptcy. There's a $200 minimum security deposit, no annual fee the first year and a $35 annual fee thereafter.
  • Wells Fargo Secured Visa. To be accepted, you must have been out of bankruptcy for one year and have no unsettled liens. Your credit limit is set by the security deposit, which can range from $300 to $10,000. There's a $25 annual fee.
  • U.S. Bank Secured Visa. This bank places your security deposit in an interest-earning savings account. There's a $35 annual fee.

Even though the government regulators backed down and allowed the fee-laden cards, don't sign up for one. Even if you have little or no credit, you can still get a secured card from a mainstream bank. For more options, check out "8 tips to get credit when you don't have any."

More on Money Talks News and MSN Money


Apr 29, 2012 1:45PM
What a crock! You are giving the bank your money to issue you a "credit" card loaded with your own money. Then you are paying interest to them for letting you use your own money loaded on their card.  Where's the "security" in that? You can simply use your debit card and avoid the  annual fee, interest free, late fees. Infact, you can get a totally free checking account by opening an account with direct deposit or by opening a paperless account ; debit card included which you can use in debit or credit mode. It will still be your own money and you won't even have to pay to use it. As for your credit report, those cards don't help take anything off and may even have an adverse effect by charging high fees, interest and penalties to already struggling people. So, how do you take control? 1.) Stop spending money you don't have on thing you don't need. 2.)Save up and buy what you need free and clear;the way our parents did. 3.) Get off and stay off the "credit" treadmill.  That's where you will find peace and rest. You'll know you're doing a good job of it when you start getting cards and offers in the mail. Don't fall for that trap.  And one more thing:  F the Jones' we never really liked their tactless azzes anyway.
Apr 29, 2012 12:49PM
what happens when you, through no fault of your own, lose your job and your house is foreclosed.  do the credit card companies and the credit reporting agencies account for these setbacks?  FICO is a scam that further entrenches the credit industry -- it does nothing to broaden credit for the vast populace.  
Apr 29, 2012 3:36AM

 Okay, the reality is this:  It's NOT a "credit card" if YOU yourself have to place your OWN money on the card!  I mean, let's get real here people----I don't care what they call it "secured" or whatever!  Just who do they think they are trying to fool here.  If that's the case, one may as well get a Walmart debit card and call it a day! (shaking my head)  At least by obtaining a Walmart card one could avoid all those high unnecessary fees!  Angry


  I am so sick of these so called credit companies forwarding me a "SECURED CREDIT CARD" offer!  People, PLEASE don't buy into that junk advertisement.  I'd rather use my overdraft privelege service with my credit union or bank  and incure a charge with them per transaction if I need to make a purchase.  In fact, here's what I do whenever I get in a crunch:  I go to the grocery store and make my purchases and get up to $200 cash back with my credit union debit card.  This way I will only incur one overdraft fee of $34.  Depending on the day of the month I make my purchases and how many times I've used my overdraft priveleges will determine whether or not there will be an additional $5 fee.  In otherwords, with the purchase of my groceries and the cash back I receive, the transaction could come up to $400 or so and at most all I have to do is pay my bank back what I bassically "borrowed" plus the bank fees anywhere between $39 to $49 for the month.


So you see, basically we're able to fill our deep freezer up with food AND have available case for gas or whatever we need to use it for.   And during these hard times, for me and my family that's much better than trying to obtain a loan from other loan shark companies.  We just make sure that we pay our bank back within 30 days; usually within two weeks, though.  So, this is just a little bit of information I wanted to put out here because I cannot stand "secured" so called "credit cards."Baring teeth

Apr 29, 2012 8:35AM
Credit cards are convenient and easier to carry than cash.  If you don't abuse them, you're fine.  If you get yourself in trouble, you end up with these choices.  These credit card/debit card choices are gruesome.
Apr 23, 2012 6:57PM
I think credit cards are dumb.   I will NEVER have one.  I will not pay someone money when if I can use a little self discipline.  You basically are paying to use their money.   No thanks, I'll just save up for the small stuff.  The only thing I can see borrowing money for is something like a house or a car.  Really, anything small like tvs, computers, clothes, gas... basically small stuff I'll just save up for.  So many people these days are like kids with an I gotta have it now attitude and have absolutely NO self discipline or an ability to save up for toys or smaller end items.
Apr 29, 2012 11:03AM

I don't fool with them period. I'm trying to climb out of debt and stay out!!


BTW, the whole "secured" card thing is a scam. Take the $500-$1k they are asking for and pay off your bill. Don't waste your time or money.

Apr 29, 2012 3:14AM

Wise words Fred.


That should be our modern day mantra - IF YOU HAVE TO CHARGE IT, YOU CAN'T AFFORD IT. And contrary to the popular t-shirt in the '80s, no, you can't HAVE IT ALL!


Credit cards are pure hell. We paid them off and cut them all up years ago. DON'T LOOK INTO THEIR EYES!! THEY'RE PURE EVIL!!

Apr 23, 2012 6:13PM
there are no fees on cash. even secured/prepaid plastic has 'loan shark' charges.    if you need it that bad, then you can not afford it.   example-the very popular walmart money card
Apr 23, 2012 6:23PM
if you want to market an unscrupulous product...hire MSN to publish a positive 'good for people' article.
Apr 29, 2012 2:18PM
The simple reason this economy is not moving is because nobody is spending money or I should say not enough people are spending money, because nobody has the credit to buy anything. But a new trend is emersing, some major companies are doing the in house credit thing and everyone is approved. This includes companies like Conn's and a local large car dealership is approving everyone on used cars only. This will I think become more popular, because there is so many people that we're hurt in this catastrophy that was caused by who ever you want to blame, take your pick, they are all in Washington. These large retail companies that are hurting because many people can not buy for what ever reason have to move their products. I really think that this will all come full circle back to the people that caused the problem. Everyone should just be patient and not buy anything that you really do not need and put the pressure back where it belongs!!!
Apr 29, 2012 2:58PM
The fact is this. If you have terrible credit and want to raise your credit score you need to have credit. These cards are terrible but if you get yourself in this position and want to buy a house or? you will need at least 3 forms of good credit. I was a mortgage broker for years and you need credit to buy a house with a descent interest rate. You need at least 1 year of good payment records. If you pay on these, double the payment you interest cost go's down. It sucks but true.
Apr 29, 2012 3:31PM

@ JC636


 Sorry but I can't agree with you on this one. The reason this economy isn't moving well is not because people aren't buying things. It's because people aren't buying what they don't need with money they don't have. Are you suggesting we create personal debt to help out the bigwigs? We the people, are no longer being tricked into staying in debt which is good for us and bad for them. Now, they have to lower prices closer to the true value of things not the inflated value. This is what they did with house values; Inflated them then gave people loans on the false inflated value until they owed more than the house was ever worth. If we did that, we be labelled a Con-Artist. Over all, this countries problem are not because we aren't buying in our personal lives, it's because they were counting on using us for ever and we caught on too fast for them. The biggest debts we have as a country was not created by us but by the thieves we were deceived into putting into office.

Apr 29, 2012 4:57AM

"These so-called "application fees" sidestep the Credit CARD Act of 2009"



Before you (Stacy Johnson and/or Jason Steele) right an article about this or any other laws PLEASE read them!!!


The Credit CARD Act of 2009 specifically stated that fees charged prior to the opening of an account were not to be used in the calculation of the percentage of maximum fees allowed.


What the Fed tried to do was put there own spin on a clearly worded law and First Premier called them on it.  And they won in Federal Court, not because they "sidestepped" the law but because it is clearly written in the law that they have the right to do it.

Feb 24, 2013 5:33PM
If you have bad credit, your most likely going to have get a secured card. If you do get a unsecured credit card the credit limit will be low and the interest rate will be high.

Your best option is to use a free consumer organization such as "Bad Credit MD" to locate the best card for your situation.
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