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Southwest Rapid Rewards Priority Credit Card Woos Premium Customers

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

Southwest Airlines has unveiled a new card it hopes will appeal to loyal flyers who want more oomph to the carrier’s current offerings. But overall, it’s a mixed bag when it comes to the new Southwest Rapid Rewards® Priority Credit Card.

The new card starts by offering new cardmembers a tempting new sign-up bonus: Earn up to 75,000 points. Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus, earn 35,000 points after you spend $5,000 on purchases in the first 6 months your account is open. But it has the highest annual fee — $149 — of Southwest’s two other personal cards. Fortunately, the potential to earn a $75 statement credit will take the edge off that fee.

If you were hoping this card would come with an upgrade on points per $1 spent than existing ones, you’re going to be disappointed. The Southwest Rapid Rewards® Priority Credit Card has the same 2 points per $1 spent on Southwest® purchases It’s surprising that there was no change, especially since competitors like American Airlines and United Airlines have upped points per $1 spent and expanded the categories that offer it.

Not only will we take a look at what the Southwest Rapid Rewards® Priority Credit Card is offering, but we’ll also compare it to two other Southwest-branded credit cards and see how it stacks up.

Southwest Rapid Rewards® Priority Credit Card Benefits

Southwest Rapid Rewards® Priority Credit Card

The information related to Southwest Rapid Rewards® Priority Credit Card has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Southwest Rapid Rewards® Priority Credit Card

Regular Purchase APR
17.49% - 24.49% Variable
Annual fee
$149
Rewards Rate
2 points per $1 spent on Southwest® purchases
Credit required
excellent-credit
Excellent

Redeeming rewards

The Southwest Rapid Rewards® Priority Credit Card allows you to earn Rapid Rewards® at the rate of 2 points per $1 spent on Southwest® purchases

There are no blackout dates or seat restrictions, you earn unlimited points that don’t expire as long as your card account is open and there are no limits on how many points you can earn. You can redeem your rewards for flights, gift cards, merchandise, hotel stays, rental cars and exclusive experiences.

What we like

The annual fee isn’t insurmountable. Cardmembers are eligible for an annual $75 statement credit, plus you get two free checked bags, making it the only major U.S. carrier to offer this benefit. The card’s $149 annual fee is nearly covered after only one roundtrip flight, based on the baggage price of $25 for the first one and $35 for the second.

Perks upgrade*. The Southwest Rapid Rewards® Priority Credit Card now gives you an automatic $75 statement credit when you spend on the card every anniversary year. That credit can help you offset the card’s $149 annual fee. And you now get a 20% statement credit when you use the card for in-flight drinks, messaging, movies and Wi-Fi.

More bonus points*. Cardmembers can Earn up to 75,000 points. Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus, earn 35,000 points after you spend $5,000 on purchases in the first 6 months your account is open. The additional points is something Southwest’s other two cards don’t offer. Southwest also boosted the number of bonus anniversary points you can earn up to 7,500.

Points for elite status*. The chance to earn 1,500 tier qualifying points (TQPs) for every $10,000 you spend on the card is the same as the Southwest Rapid Rewards® Premier Credit Card. These are important, because they help you reach and maintain your Rapid Rewards A-List or A-List Preferred status on Southwest Airlines.

A-List status comes after you fly 25 one-way trips or 35,000 TQPs or A-List Preferred after 50 one-way trips or 70,000 TQPs in a calendar year. You want A-List for perks like priority check-in and dedicated security lanes (where available), along with priority boarding, a 25% points bonus, a dedicated customer service line and free same-day standby on flights. A-List Preferred status is even better, with all the perks of A-List plus a 100% points bonus and free in-flight Wi-Fi.

Good route network*. Your points are good on 100 Southwest Airlines destinations in the U.S., Mexico, Central America, and the Caribbean. But if you want to go beyond that network, Southwest Airlines’ More Rewards website lets you use your points to fly to destinations around the world.

All a-boarding*. Because Southwest Airlines has open seating on its flights, regular travelers value any chance to get higher boarding numbers to avoid the dreaded middle seat or risk being forced to check a carry-on bag. This card helps by reimbursing you when you buy up to four coveted A1-A15 boarding passes a year at the departure gate or ticket counter. That credit is worth between $30 and $50 for each flight depending on your itinerary, making this a perk worth between $120 and $200 a year.

Companion pass*. The chance to earn this popular perk — which requires you to fly 100 qualifying one-way flights or earn 125,000 qualifying points in a calendar year — remains. Once you hit the numbers, you can bring a companion along for free, minus fees and government taxes, on flights you buy or redeem with Rapid Rewards during a calendar year.

Travel and purchase protection*. This card comes with benefits like delayed/lost luggage insurance, travel accident insurance, travel and emergency assistance services, auto rental collision damage waiver, roadside dispatch, purchase protection and extended warranty, all under the Visa Signature banner.

*Terms and conditions apply.

What we don’t like

Lower points per $1 spent. Southwest Airlines had a chance to boost this in popular categories like dining, gas, groceries and a broader definition of travel — like its airline competitors have done — but it punted. The Southwest Rapid Rewards® Priority Credit Card’s rate still remains at 2 points per $1 spent on Southwest® purchases

Higher cost for international flights. While you can book international flights on Southwest’s More Rewards website, you’re only going to get a redemption rate around 1 cent per point. Booking travel on Southwest’s route network is a better value. Let’s say you wanted to fly from New York to London. It will cost you 83,275 miles on British Airways or up to 302,541 miles on United Airlines — in coach class.

Spending for points. There’s a heavy spend — $15,000 a year — to get extra bonus points. This goes along with the minimum $10,000 a year spend to get the TQPs.

Premium boarding. You can only use the four A1-A15 boarding passes on the day of travel, and there’s no guarantee that space will be available.

Check that score. You’ll need to have excellent credit to apply for this card.

Card alternatives

 Southwest Rapid Rewards® Priority Credit CardSouthwest Rapid Rewards® Premier Credit CardSouthwest Rapid Rewards® Plus Credit Card
Annual fee$149$99$69
Sign-up bonusEarn up to 75,000 points. Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus, earn 35,000 points after you spend $5,000 on purchases in the first 6 months your account is open.Earn up to 75,000 points. Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus, earn 35,000 points after you spend $5,000 on purchases in the first 6 months your account is open.Earn up to 75,000 points. Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus, earn 35,000 points after you spend $5,000 on purchases in the first 6 months your account is open.
Rewards2 points per $1 spent on Southwest® purchases2 points per $1 spent on Southwest® purchases and Rapid Rewards® hotel and car rental partner purchases. 1 point per $1 spent on all other purchases.2 points per $1 spent on Southwest® purchases
Foreign transaction fee$0$03% of each transaction in U.S. dollars

Both the Southwest Rapid Rewards® Premier Credit Card and the Southwest Rapid Rewards® Plus Credit Card have benefits similar to what’s offered by the Southwest Rapid Rewards® Priority Credit Card. They include the same points per $1 spent, companion pass, access to A-List and A-List Plus elite status, Transfarency and flexible domestic and international reward travel. But there are differences.

Southwest Rapid Rewards® Premier Credit Card

The information related to Southwest Rapid Rewards® Premier Credit Card has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Southwest Rapid Rewards® Premier Credit Card

Regular Purchase APR
17.49% - 24.49% Variable
Annual fee
$99
Rewards Rate
2 points per $1 spent on Southwest® purchases and Rapid Rewards® hotel and car rental partner purchases. 1 point per $1 spent on all other purchases.
Credit required
excellent-credit

Excellent

The Southwest Rapid Rewards® Premier Credit Card starts with a similar sign-up bonus — Earn up to 75,000 points. Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus, earn 35,000 points after you spend $5,000 on purchases in the first 6 months your account is open. But it doesn’t come with the chance to earn 25,000 bonus miles by spending $15,000 in a calendar year like the Southwest Rapid Rewards® Priority Credit Card. You’ll pay $99 annual fee, but it’s higher once you factor in the Southwest Rapid Rewards® Priority Credit Card’s $75 statement credit, which isn’t offered with the Southwest Rapid Rewards® Premier Credit Card.

The Southwest Rapid Rewards® Premier Credit Card comes with 6,000 bonus points on an anniversary year, 1,500 fewer than what’s offered by the Southwest Rapid Rewards® Priority Credit Card.

Southwest Rapid Rewards® Plus Credit Card

The information related to Southwest Rapid Rewards® Plus Credit Card has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Southwest Rapid Rewards® Plus Credit Card

Regular Purchase APR
17.49% - 24.49% Variable
Annual fee
$69
Rewards Rate
2 points per $1 spent on Southwest® purchases
Credit required
excellent-credit

Excellent

The Southwest Rapid Rewards® Plus Credit Card also has the same sign-up bonus as the Southwest Rapid Rewards® Priority Credit Card, also with no chance to earn the latter’s 25,000 bonus miles. The card comes with only 3,000 bonus points on an anniversary year. This card only comes with lost luggage reimbursement, baggage delay insurance, extended U.S. manufacturer’s warranty and purchase protection.

The bottom line

While the Southwest Rapid Rewards® Priority Credit Card does come with a better sign-up bonus than Southwest’s two other cards, you also have to spend more to snag it. But thanks to the new card’s yearly $75 statement credit, the Southwest Rapid Rewards® Priority Credit Card is cheaper to have in your wallet than the Southwest Rapid Rewards® Premier Credit Card.

If you combine the lower annual fee with enhanced perks on the Southwest Rapid Rewards® Priority Credit Card — the $75 statement credit, the four high boarding passes and the 20% inflight discount — it may be a good alternative to the Southwest Rapid Rewards® Premier Credit Card and the Southwest Rapid Rewards® Plus Credit Card.

But make sure you are a die-hard Southwest flyer, because you can only use them on the carrier’s Rapid Rewards website. That means you don’t get the flexibility to use your points that come with non-airline, travel-related credit cards.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Credit Cards

Discover it Cash Back Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

The Discover it® Cash Back is a great $0 annual fee card that provides a quarterly rotating cashback program where you can benefit from various 5% bonus categories. You may not benefit from all the categories, but there’s a good chance at least one quarter’s categories will suit your spending. This card also has many of the perks Discover is known for, including no foreign transaction fees and no penalty APR, which add value beyond the cashback program.

Discover it® Cash Back

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Rates & Fees

Discover it® Cash Back

Annual fee
$0
Intro Purchase APR
0% for 14 months
Regular APR
13.49% - 24.49% Variable
Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
Credit required
good-credit
Excellent/Good

Breaking down the rewards

This card offers a cashback program where you can earn 5% cash back at different places each quarter — like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs — up to the quarterly maximum each time you activate. You earn 1% unlimited cash back automatically on all other purchases.

The quarterly maximum is $1,500, allowing you to earn up to $75 cash back in the 5% cashback categories each quarter. Purchases exceeding $1,500 in the bonus categories earn an unlimited 1% cash back. Activation is required.

This card also comes with a new cardmember offer where Discover will match ALL the cash back you’ve earned at the end of your first year, automatically. There’s no signing up. And no limit to how much is matched. There’s no signing up. And no limit to how much is matched. So, if you earn a total of $200 cash back during your first 12 consecutive billing periods, Discover will match it and apply your cash back within the next one to two billing periods.

What are the 5% cashback categories?

  • January – March 2020 – Grocery stores, Walgreens, CVS
  • April – June 2020 – Gas Stations, Uber and Lyft, wholesale clubs
  • July – September 2020 – Restaurants and PayPal
  • October – December 2020 – Amazon.com, Target.com, and Walmart.com

What can cash back be redeemed for?

  • Statement credits
  • Direct deposits
  • Gift cards starting at $20 (with at least $5 free added to each card)
  • Purchases at Amazon.com when you pay with rewards
  • Donations to charity

How do I activate the 5% cashback categories?

There is no automatic activation — you’ll have to either manually log in to your account and activate or call 1-800-DISCOVER (1-800-347-2683). And while you may worry about forgetting to activate the 5% cashback categories, Discover makes the process a bit less stressful by providing plenty of time for you to activate. You typically can activate two months before the new 5% cashback categories start. For example, if you want to utilize the 5% cashback categories for October-December, you can activate starting August 1st. Plus, you can sign up for email alerts and push notifications via the Discover app.

Does cash back expire?

No, cash back doesn’t expire. If your account is closed or if you haven’t used it within 18 months, Discover will credit your account with any cash back remaining.

What we like about this card

The chance to pay for new purchases over time or get out of debt. If you plan on making new purchases that you can’t pay by your due date, or if you have a balance on a non-Discover card, this card provides you the opportunity to avoid interest charges. There is an intro 0% for 14 months on purchases and an intro 0% for 14 months on balance transfers. After the intro periods end, a 13.49% - 24.49% Variable APR applies. Take note: there is a 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*, which is typical; however, there are also cards with intro $0 balance transfer fees.

No fee on your first late payment. If you miss a payment, don’t fret about incurring a late fee —  Discover waives your first late payment fee. Use this as a reminder to set up autopay or payment reminders.

No penalty APR: If you pay late, your interest rate won’t increase, unlike other cards that may charge penalty APRs near 30%. 

No foreign transaction fee. This card doesn’t charge the typical 3% fee some other cards charge on purchases made outside the U.S.

What to watch out for

13.49% - 24.49% Variable APR. While this APR range is typical of credit cards, it’s not ideal if you’re someone who carries a balance month-to-month. You can find other low interest credit cards that provide lower APR ranges and are better suited for people who carry balances.

What other cards should I consider?

Citi® Double Cash Card – 18 month BT offer

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The information related to Citi® Double Cash Card – 18 month BT offer has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Citi® Double Cash Card – 18 month BT offer

Annual fee
$0
Intro BT APR
0% for 18 months on Balance Transfers
Balance Transfer Fee
3% of each balance transfer; $5 minimum.
Regular Purchase APR
15.49% - 25.49% (Variable)
Rewards Rate
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay.
Credit required
good-credit
Excellent/Good

The Citi® Double Cash Card – 18 month BT offer is a great flat-rate cashback card. Compared to the Discover it® Cash Back, which has quarterly rotating categories, you earn the same cashback rate on all purchases — Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay. This is a straightforward way to earn cash back, and you don’t have to worry about activating bonus categories. Additional perks of this card include Citi® Private Pass®, where you can get exclusive access to various entertainment events, and Citi® Price Rewind, which conducts a 60-day search for a lower price on eligible items you register, potentially giving you the difference if a lower price is found (up to $200 back per item, and up to $1,000 per year).

Citi Simplicity® Card - No Late Fees Ever

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The information related to Citi Simplicity® Card - No Late Fees Ever has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Citi Simplicity® Card - No Late Fees Ever

Annual fee
$0
Intro Purchase APR
0% for 12 months on Purchases
Intro BT APR
0% for 21 months on Balance Transfers
Regular Purchase APR
16.24% - 26.24% (Variable)
Balance Transfer Fee
5% of each balance transfer; $5 minimum
Credit required
good-credit
Excellent/Good

The Citi Simplicity® Card - No Late Fees Ever is a good alternative to the Discover it® Cash Back if you’re looking to finance new purchases. There is an intro 0% for 12 months on Purchases, which can help you pay off purchases over time without accruing interest. After the intro period ends, a 16.24% - 26.24% (Variable) APR applies. While there are no rewards, this card has less fees than typical credit cards — there are no late fees and no penalty APR. Although this can be helpful if you forget to pay a bill, we encourage you to always make on time payments so you don’t rack up interest charges.

Bottom line

If you don’t mind activating quarterly bonus categories, the Discover it® Cash Back is a great choice for a $0 annual fee cashback card. Plus, you can benefit from the unique new cardmember intro offer in which Discover will match ALL the cash back you’ve earned at the end of your first year, automatically. There’s no signing up. And no limit to how much is matched.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Credit Cards

Unsecured Credit Cards for Bad Credit

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

Unsecured cards are the most popular type of credit cards available — they are simply regular credit cards. The term “unsecured” means that you don’t need to deposit money or use any other collateral in order to receive a line of credit — credit card issuers extend credit based on your credit history and various other factors.That’s why, if you have bad credit, it can be difficult to qualify for most good credit card deals. Poor credit is considered at or below a 579 credit score, and it signals to lenders that you’re a high-risk borrower.

Poor credit doesn’t make it impossible to access credit cards, however, but the key is to use credit responsibly so your credit score will improve and you’ll have a chance at qualifying for better deals.

We’ve put together this guide to help you understand the best options for people with bad credit.

Our top picks

Unsecured card: Credit One Bank® Platinum Visa® with Cash Back Rewards

Credit One Bank® Platinum Visa® with Cash Back Rewards

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Credit One Bank® Platinum Visa® with Cash Back Rewards

Regular Purchase APR
19.49% -25.49% Variable
Annual fee
$0-$99
Rewards Rate
1% on eligible purchases, terms apply

Credit One is hardly the best credit card out there, with a host of potential fees that make it expensive to carry. On the plus side, however, it is accessible to those with poor credit. It offers several cards that carry the potential for 1% on eligible purchases, terms apply. People with bad credit will find it hard to qualify for credit cards and harder to qualify for cards with rewards. Therefore, the cashback feature is a good perk of Credit One cards. But remember — not everyone will qualify for a cashback card.

Terms

  • Regular purchase APR: 19.49% -25.49% Variable
  • Cash advance APR: 25.49% Variable
  • Annual membership fee: $0-$99
    Depending on your account, the annual membership fee will be divided into 12 equal portions and billed monthly or it will be billed yearly for the second and each following year your account is open
  • Authorized user participation fee: $19 annually (if applicable)
  • Cash advance fee: Either $5 or 8% of the amount of each Cash Advance, whichever is greater, or $10 or 3% of each Cash Advance, whichever is greater.
  • Late payment fee: Up to $39
  • Returned payment fee: Up to $39

What to watch out for

The annual fee will hit your account right away — eating into your total available limit. The fine print of the terms and conditions explains:

NOTICE: If your Account has an Annual Membership Fee, it will be billed to your Account when it is opened and will reduce the amount of your initial available credit. For example, if your Account is established with a credit line of $300 and your First year Annual Membership Fee is $75, your initial available credit will be $225.

This is key to realize if you are charged an annual membership fee. You can quickly see your credit limit decrease when opening your account; especially if you are charged the highest annual fee.

Another term to be aware of is the authorized user participation fee at $19 annually. Most personal credit cards do not charge a fee for authorized users so this is an added fee Credit One charges if you decide to add an authorized user.

Secured card: Discover it® Secured

Discover it® Secured

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Rates & Fees

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Discover it® Secured

Regular APR
24.49% Variable
Annual fee
$0
Rewards Rate
2% cash back at gas stations and restaurants on up to $1,000 in combined purchases every quarter, automatically. 1% unlimited cash back on all other purchases.
Minimum Deposit
$200
Credit required
bad-credit
New/Rebuilding

The Discover it® Secured is our top pick for secured cards for numerous reasons — from the automatic monthly account reviews starting at 8 months to the cashback program, this card provides exceptional benefits for cardholders.

Pros:

  • Automatic monthly account reviews: Starting at eight months, Discover will review your account to see if you qualify for receiving your security deposit back. If you have responsible credit management across all your credit products, you may be graduated to an unsecured card and recieve your security deposit back.
  • Cashback program: This card has a unique feature that’s uncharacteristic of secured cards — a cashback program where you can earn 2% cashback at restaurants or gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cashback on all your other purchases.
  • Free FICO® Credit Score: You receive your free FICO® Credit Score with Discover Credit Scorecard as well as other credit information, like recent inquiries and revolving utilization. This is a great way to track your credit progress and checking your score doesn’t affect hurt your credit.

Cons:

  • High APR: Most secured cards have high APRs, and this one does, too. But, if you pay your balance in full each month, you won’t be charged interest.

Read our review of the Discover it® Secured. 

The risks of unsecured cards for bad credit

The majority of unsecured cards that accept people with bad credit have numerous fees that can have you questioning if the card is really helping you.

Here are several drawbacks you may see with unsecured cards for bad credit:

  • High APRs: Typical cards have APR ranges that max out around 25%, but unsecured cards for bad credit can have APRs near 30%. Also, since you have bad credit, you most often will receive the highest APR listed in the terms and conditions.
  • Annual fee: Many credit cards in general have annual fees, but this can often be outweighed by the added benefits provided. However, unsecured cards for bad credit often lack the added benefits that cards for good credit offer.
  • Program or processing fee: Unsecured cards for bad credit often charge a program or processing fee that serves to open your account and lets you access your credit. This is something you won’t find with unsecured cards from major banks and credit card issuers.
  • Monthly service fee: This fee is characteristic of some unsecured cards and is another cost you have to keep in mind before applying since it can effectively lower your line of credit.

Credit card options when you have bad credit

Store credit cards

Odds are you’ve been asked to apply for a credit card while checking out at a store or online. The card offers often entices you with a rewards program or discount on your current purchase, and gets you thinking if you should apply. The card that you’re being offered is a store credit card and these cards can only be used at the issuing store. Since they are more likely to approve you compared with regular credit cards, they may seem like an easy way to establish credit, but there are some pitfalls to keep in mind.

Pros:

  • Good approval odds: Store cards are more likely to extend you credit than regular credit cards.
  • Rewards and discounts: Store cards often give you rewards for each purchase you make and send you card member discounts. This can be a great way to save money at stores where you frequently shop.

Cons:

  • Limited use: You most likely can only use your card in the issuing store. For example, a Target REDcardTM Credit Card can only be used for Target purchases.
  • High interest rates: Store cards tend to have higher interest rates than regular cards, so make sure you pay your statements in full and on time to avoid interest charges.

Store card options

Target REDcard™ Credit Card

Target REDcard™ Credit Card

Regular Purchase APR
25.15% Variable
Annual fee
$0
Rewards Rate
5% at Target & Target.com

Lowe’s Advantage Card

Lowe’s Advantage Card

Regular Purchase APR
26.99% Variable
Annual fee
$0
Rewards Rate
Get 5% off your eligible purchase or order charged to your Lowe’s Advantage Card.

Home Depot Consumer Credit Card

Home Depot Consumer Credit Card

Regular Purchase APR
17.99%-26.99% Variable
Annual fee
$0

Secured credit cards

A secured credit card requires you to deposit money upfront, which acts as collateral in case your account defaults. The amount you deposit typically becomes your line of credit. For example, if you put down a $200 security deposit, that means you likely have a $200 credit limit; deposit more and your credit limit will increase. Typical security deposits are $200, but you can be asked to deposit more or less depending on the card.

Pros:

  • Less chance of overspending: Since your credit limit is equal to the amount you deposit, it’s unlikely you will have a high credit limit. This can prevent you from charging large amounts and falling into debt.
  • Great way to build or improve: Secured cards are our favorite way to build or improve credit since you are more likely to be approved for a secured card with bad credit, and you can see your score rise with proper credit behavior and spending as little at $10 a month.

Cons:

  • Security deposit required: You may not have the money available for the required security deposit, therefore possibly ruling out your chances of a secured card.
  • Low credit limit: Your line of credit is equal to your security deposit and most people don’t have the money available to deposit hundreds or thousands of dollars, making your available line of credit lower than unsecured cards.

Secured card options

Capital One® Secured Mastercard®

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Capital One® Secured Mastercard®

Regular Purchase APR
26.99% (Variable)
Annual fee
$0
Minimum Deposit
$49, $99, or $200

The Capital One® Secured Mastercard® is a good option for people who may not be able to afford a $200 security deposit since this card also offers a $49 or $99 deposit — but be aware that you don’t choose your deposit, Capital One® does. So you may not receive the lower deposit.

Pros:

  • Potentially low security deposit: You may qualify for a $49 to $200 deposit. If you qualify for one of the lower deposits, you will still receive a $200 line of credit.
  • Access to a higher credit line: When you make your first five monthly payments on time, you receive a higher credit line.
  • Account reviews: Capital One® reviews your account to see if you can be transitioned to an unsecured card and receive your deposit back. However, there is no set time frame for when your account will be reviewed.

Cons:

  • High APR: Similar to other secured cards, this card has a high APR that can be an issue if you carry a balance. A good rule of thumb is to pay each bill in full and on time to avoid interest charges.

Read our review of the Capital One® Secured Mastercard®.

Credit builder loans

A credit builder loan is when a lender (typically a credit union) puts funds into a savings account or CD and a borrower makes monthly payments until the amount is paid off. Typically, the borrower cannot access the funds until the balance is paid in full. Your savings act as collateral for the lender, so if you don’t make payments they know they won’t lose money.

The monthly payments you make include interest fees and often occur over a 12-, 18- or 24-month term. Credit builder loans can be a good way for you to improve your credit score and act as a forced savings since you can’t withdraw funds until you repay the amount you borrowed.

Pros:

  • Report to the credit bureaus: Credit builder loans report to the major credit bureaus, allowing you to rebuild or establish credit history — as long as you follow the terms of your loan and make timely payments.
  • Source of savings: Since the funds are placed in a savings account or CD, you have a forced savings that is accessible at the end of the loan term.

Cons:

  • Funds are locked: You can’t withdraw money borrowed until your loan is paid off. So if you need money upfront, a credit builder loan isn’t a good option.

Options

Self Lender

Credit builder loans at Self Lender offer 12 or 24 month loans where you pay back a loan from $520 to $1,663. Funds are deposited into a CD that’s FDIC-insured and earns interest. However, you cannot access the funds until the loan is paid off. There is a $9 non-refundable administration fee that you pay when you open your account. After that, you pay equal monthly payments for the term of your account (these payments include interest charges). Once you pay off the amount borrowed, you can access your funds plus interest earned.

Republic Bank

At Republic Bank, you can take out a credit builder loan for 12, 18 or 24 months with loan amounts of $500, $1,000 or $1,500. Your funds are placed in a CD that earns interest and is only accessible once the loan is paid. There is a $10 processing fee when you open your account. When you complete your monthly payments (which include interest), you can either withdraw your funds or leave them in a CD.

Unsecured credit card options for bad credit

An unsecured credit card is simply a regular credit card. Unlike secured cards, there is no minimum security deposit required to access a line of credit. These cards often provide higher credit limits than secured cards and can help you build credit when used responsibly.

Pros:

  • You won’t need to make a deposit to access your line of credit.
  • Unsecured cards typically have higher credit limits than secured cards. And, the two cards mentioned below both have credit limits starting at $300.

Cons:

  • Many secured cards for bad credit come with annual fees, so you’ll have to make sure the fee is worth it. If the unsecured card has an annual fee but no rewards, look for alternatives.

Capital One® QuicksilverOne® Cash Rewards Credit Card

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on Capital One’s website

Capital One® QuicksilverOne® Cash Rewards Credit Card

Annual fee
$39
Rewards Rate
1.5% Cash Back on every purchase, every day
Regular Purchase APR
26.99% (Variable)
Credit required
fair-credit
Average/Fair/Limited

The Capital One® QuicksilverOne® Cash Rewards Credit Card is a good unsecured card for those looking to earn cash back while building credit — just watch out for the $39 annual fee.

Pros:

  • You can earn 1.5% cash back on every purchase, every day. This is a decent rate considering this is a card for those with average/fair/limited credit.
  • When you make your first five monthly payments on time, you receive a higher credit line.

Cons:

  • This card comes with a $39 annual fee. Annual fees are common for cards aimed at people with poor credit, but you can find cards without annual fees like the Capital One® Platinum Credit Card mentioned below. With this card, if you spend $2,600 a year, you’ll earn enough cash back to recoup the fee.
  • This card comes with a high APR that can be an issue if you carry a balance. Try to always pay on time and in full so you don’t incur interest charges.

Capital One® Platinum Credit Card

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on Capital One’s website

Capital One® Platinum Credit Card

Annual fee
$0
Rewards Rate
Non-rewards Card
Regular Purchase APR
26.99% (Variable)
Credit required
fair-credit
Average/Fair/Limited

The Capital One® Platinum Credit Card is a decent option if you want a no-frills, unsecured credit card that can allow you to build credit without the distraction of rewards.

Pros:

  • When you make your first five monthly payments on time, you receive a higher credit line.
  • This card is no-frills, but that may be the best option for you if you think you may be tempted to overspend with a rewards card. You can use this card to build credit and work toward a higher credit score.

Cons:

  • Similar to most cards for less-than-stellar credit, there is a high APR. However, if you pay your balance on time and in full each month, this won’t be an issue.

Total VISA® Credit Card

The Total VISA® Credit Card is also accessible to those with poor credit, but it comes at a steep price —  a long list of fees. Apply with caution.

Terms

  • Regular purchase APR: See Terms
  • Cash advance APR: See Terms
  • Program fee: If approved, pay an $89.00 program fee to open your account and access your available credit.
  • Annual Fee: See Terms
  • Monthly servicing fee: None for first year (introductory). After that, $75 annually ($6.25 per month).
  • Additional card fee: $29 annually (if applicable)
  • Cash advance fee: None for first year (introductory). After that, either $5 or 5% of the amount of each cash advance, whichever is greater.
  • Late payment fee: Up to $39
  • Returned payment fee: Up to $39

What to watch out for

The Total VISA® Credit Card has numerous fees that make this card quite expensive to use, and many fees are not typical of mainstream credit cards. The APR is one of the highest on the market (See Terms for APR), and typical credit cards have APRs that max out around 25%.

Similar to Credit One, the annual fee (See Terms) for the Total VISA® Credit Card is deducted from your initial credit line, lowering your available credit until the fee is paid off:

Notice: The Annual Fee will be assessed before you begin using your card and will reduce the amount of credit you initially have available. Based on your initial credit limit of $300.00, your initial available credit will only be $225.00 (only $196.00 if you choose to have an additional card).

There is a monthly servicing fee of $75 annually ($6.25 per month) associated with this card that is quite steep and characteristic of cards for bad credit. Also, if you take out additional cards, you will be charged $29 annually. Considering the program fee, annual fee and monthly service fees, you’re looking at a jaw-dropping amount of fees with this card. In the first year, if you’re only considering the program and annual fee, you would be charged $164 and subsequent years would incur $123 in fees from the annual fee and monthly servicing fees.

Finally, watch out for the credit limit increase fee. Once your account has been open at least a year, Total VISA can charge you a 20% fee on credit limit increases. For example, if your limit is increased by $100, that’s a $20 fee.

Learn more

How to build credit

As someone with bad credit, it’s important to practice responsible credit behavior and follow several rules so you can improve your credit.

  1. Pay your bills on time: When you receive a bill, pay it as soon as possible and always before the due date. By paying on time, you won’t be charged a late payment fee and the lender won’t have to report your bad credit behavior to the credit bureaus. Use autopay features or set calendar alerts so you don’t forget.
  2. Pay your statement balance in full every month: Don’t carry a balance on your card because you’ll be charged interest on any overdue amounts and can fall into debt.
  3. Don’t max out your card: If you receive a $500 credit limit, don’t spend the full amount each month because that shows lenders you’re a risky client and negatively impacts your credit score. The amount of your available credit you use is known as utilization and the goal is to have a 20% or lower utilization rate — so spend $100 or less on a card with a $500 credit limit.

The information related to Total VISA® Credit Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

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