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Credit Cards, Reviews

Blue Cash Preferred® Card Review: The Perfect Cashback Card for Grocery Shoppers?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication. This site may be compensated through a credit card partnership.

If you’re looking for a cashback program that will reward you handsomely for grocery shopping, the Blue Cash Preferred® Card from American Express is one to check out. Although this card has an annual fee, the amount of cash back you have the potential to earn can easily cover the fee.

Blue Cash Preferred® Card from American Express

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on American Express’s secure website

Terms Apply | Rates & Fees

Blue Cash Preferred® Card from American Express

Regular Purchase APR
15.24%-26.24% Variable
Annual fee
$95
Rewards Rate
NEW 6% Cash Back on select U.S. streaming subscriptions & 3% Cash Back on transit including taxis/rideshare, parking, tolls, trains, buses and more

How to earn cash back with the Blue Cash Preferred® Card from American Express

1. Earn 6% cash back at U.S. supermarkets (up to $6,000 per year of purchases, then 1%).

The supermarket category excludes superstores and warehouses. Specialty retailers like wine stores and convenience stores likely won’t earn 6% cash back either. The annual cap for the supermarket category is $6,000; after, you earn 1%.

2. Earn 6% cash back on streaming services

Earn 6% cash back on select U.S. streaming subscriptions, including Amazon Music, Hulu, Netflix and Pandora, among others.

3. Earn 3% cash back on transit

Earn 3% cash back on transit including taxis/rideshare, parking, tolls, trains, buses and more.

4. Earn 3% cash back at U.S. gas stations, 1% cash back on everything else.

There’s no annual spending cap for the 3% and 1% cashback categories.

5. Earn a welcome offer.

You can $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.

How redeeming cash back works

Cash back earned converts into Blue Cash Rewards Dollars. You can redeem Blue Cash Rewards Dollars for a statement credit in increments of $25.

Word of warning: A cashback statement credit does not get applied to your minimum payment. To keep your card in good standing, you need to make at least the minimum payment each month even if you redeem cash back.

Overview of card benefits

These are the American Express perks:

  • Car rental loss and damage insurance. You can decline the rental agency’s collision damage waiver because you’re covered if your rental car is damaged or stolen when you pay with this card, though some countries like Australia and Italy aren’t covered.
  • Global assist hotline. When traveling, you get 24/7 access to legal, emergency and financial assistance.
  • Travel accident insurance. You get coverage for accidental death or dismemberment during travel.
  • Extended warranty of up to an additional year after your manufacturer’s warranty expires.
  • Roadside assistance for emergencies if your car needs to be towed, you need to fix a flat or you need a battery jump. Third-party service costs may apply.

What we like about this card

6% cash back at U.S. supermarkets up to $6,000 per year, then 1%

Despite the annual fee and category restrictions, we’re still big fans of the Blue Cash Preferred® Card from American Express. You only need to spend $1,583 per year (or $132 per month) on groceries to earn enough cash back to cover the $95 annual fee.

Since the supermarket spending cap is a generous $6,000 per year, you still have plenty of room to earn cash back beyond this break-even point. If you spend a full $6,000 at U.S. supermarkets in a year, you’ll earn $360 in cash back before the annual fee is deducted.

6% cash back on streaming services

You’ll be able to earn 6% cash back on select U.S. streaming subscriptions, including HBO Now, SiriusXM and YouTube TV, among others.

3% cash back at U.S. gas stations

You’ll be able to earn 3% cash back in the gas category without any cap, which can serve you well on your commute.

3% cash back on Transit

You’ll be able to earn 3% cash back on transit including taxis, rideshare, parking, tolls, trains, buses and more.

No revolving categories

This card is simple to use. You don’t need to enroll in the bonus categories quarterly or annually. You just need to remember to pull out this card when you shop at major U.S. supermarkets and U.S. gas stations.

What we don’t like about this card

Store restrictions in 3% and 6% categories

Category restrictions are common for most cashback cards, but still a piece of fine print for which you should be aware. American Express uses merchant codes to determine how much cash back you get on each purchase.

Stores like Amazon, BJ’s Wholesale Club, Target and Walmart won’t qualify as supermarket spending.

Furthermore, you can’t earn 3% cash back by pumping gas just anywhere. You have to buy gas at places with a U.S. gas station merchant code. Gas purchases at U.S. supermarkets or U.S. warehouse clubs will not qualify unless otherwise noted.

This restriction on gas spending may be the biggest deal-breaker for savvy gas shoppers since supermarkets and warehouses often have competitive gas prices with minimal markup.

Before you apply for the card, contact American Express if you pump at discount locations to see if the spending qualifies. American Express has a short list of example stores that fall into each cashback category here.

Who the Blue Cash Preferred® Card from American Express is best for

Whether the Blue Cash Preferred® Card from American Express is or isn’t for you will depend on how much you spend in the bonus categories.

Here’s why:

The Blue Cash Preferred® Card from American Express has a sister card that comes with a $0 annual fee called the Blue Cash Everyday® Card from American Express.

The Blue Cash Everyday® Card from American Express gives 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 2% cash back at U.S. gas stations and at select U.S. department stores. 1% cash back on other purchases.

Pick the Blue Cash Everyday® Card from American Express ($0 annual fee) instead of the Blue Cash Preferred® Card from American Express ($95 annual fee) if you spend less than $3,200 per year on qualifying groceries (about $300 a month).

If you spend more than $3,200 on groceries per year (about $300 a month), the Blue Cash Preferred® Card from American Express with the $95 annual fee outperforms the $0 annual fee Blue Cash Everyday® Card from American Express.

Another thing to consider is where you do your shopping.

If you live in a city where major supermarkets are few and far between, neither the Blue Cash Preferred® Card from American Express nor the Blue Cash Everyday® Card from American Express will serve you well. You won’t get 6% for food purchases at corner markets and specialty stores.

Shoppers who stock up for groceries at warehouse or superstores like Walmart will also get less use from these American Express cashback cards since that spending doesn’t qualify.

Consumers who’ll get the most out of the Blue Cash Preferred® Card from American Express are those who spend at places that are eligible for bonus cash back like Whole Foods, Safeway and Kroger.

Approval chances

You have the best chance of getting approved for the Blue Cash Preferred® Card from American Express with good to excellent credit (a score that’s 670 or above).

Alternatives

You can find our ultimate roundup of cashback cards for every category in this post.

Here we’ll cover four alternatives to compare against the Blue Cash Preferred® Card from American Express:

  • Blue Cash Everyday® Card from American Express
  • Chase Freedom®
  • Citi® Double Cash Card – 18 month BT offer
  • Alliant Cashback Visa® Signature Card

Blue Cash Everyday® Card from American Express

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on American Express’s secure website

Terms Apply | Rates & Fees

Blue Cash Everyday® Card from American Express

Regular Purchase APR
15.24%-26.24% Variable
Annual fee
$0
Rewards Rate
3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 2% cash back at U.S. gas stations and at select U.S. department stores. 1% cash back on other purchases.

As mentioned, the Blue Cash Everyday® Card from American Express is the $0 annual fee version of the Blue Cash Preferred® Card from American Express. It offers 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 2% cash back at U.S. gas stations and at select U.S. department stores. 1% cash back on other purchases. Again, this is the card to go with instead of the Blue Cash Preferred® Card from American Express if you spend less than $3,200 per year on qualifying groceries.

But, let’s be honest: $3,200 — or $267 per month — spent on groceries is a pretty small sum even for a one- or two-person household. For this reason, the Blue Cash Preferred® Card from American Express is what we prefer of the two supermarket cards.

Chase Freedom®

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on Chase Bank’s secure website

Chase Freedom®

Regular Purchase APR
17.24% - 25.99% Variable
Annual fee
$0
Rewards Rate
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.

A revolving category cashback card is an alternative if you spend pretty evenly across multiple areas. Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases. The categories change quarterly on the Chase Freedom®. There’s a $1,500 quarterly spending cap on the 5% category. The bonus categories for April-June 2019 are grocery and home improvement stores, but categories change every quarter, and there’s no guarantee these will be a bonus category in the future.

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 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

Regular Purchase APR
15.74% - 25.74%* (Variable)
Annual fee
$0*
Rewards Rate
Earn 2% cash back on purchases 1% when you buy and 1% as you make payments for those purchases

An unlimited flat-rate cashback card such as the Citi® Double Cash Card – 18 month BT offer is good to pair with any of the category cards we discuss above. The Citi® Double Cash Card – 18 month BT offer offers unlimited 2% cash back on all purchases (Earn 2% cash back on purchases 1% when you buy and 1% as you make payments for those purchases), making this a great card to earn a consistent cashback rate. There is a $0* annual fee for this card.

Alliant Cashback Visa® Signature Card

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on Alliant Credit Union’s secure website

Alliant Cashback Visa® Signature Card

Regular Purchase APR
12.49% - 15.49% Variable
Annual fee
$99 annual fee, waived the first year
Rewards Rate
Unlimited 3% cash back during the first year; 2.5% cash back afterwards

The Alliant Cashback Visa® Signature Card offers unlimited 3% cash back during the first year; 2.5% cash back afterwards. There is a $99 annual fee, waived the first year. A good rewards strategy is partnering a high cashback rate category card with one of these unlimited cards for non-category spending.

FAQ

The acceptance of American Express is worse than for Visa and MasterCard — especially outside of the United States. However, the network continues to expand every year, and it is much more difficult to find places in the U.S. that don’t accept Amex.

Anything you spend over the $6,000 cap at U.S. supermarkets will earn only 1% cash back. Fortunately, there is the 6% cash back on streaming services and 3% cash back at U.S. gas stations and on transit, so you’ll always get bonus cash back for that spending.

No, Blue Cash Rewards Dollars do not expire as long as your account remains open.

Yes, the minimum amount to redeem Blue Cash Rewards Dollars is $25.

Blue Cash Rewards Dollars can only be redeemed for statement credit. They can’t be redeemed for merchandise or gift cards.

Blue Cash Rewards Dollars are redeemable for statement credit, while Membership Rewards® Points are redeemable for statement credit, travel, gift cards, merchandise or entertainment. With the Blue Cash Preferred® Card from American Express you receive Blue Cash Rewards Dollars.

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.

Taylor Gordon
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Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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Building Credit, Credit Cards

How (and why) to Request a Credit Limit Increase With Capital One

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Credit Limit Increase with Capital One

Getting a credit limit increase may be beneficial — as long as you maintain responsible spending habits. Here, we’ll tell you how to increase your limit when on a Capital One credit card.

First, it’s important to understand that each credit card company has different requirements for limit increases. Before sharing the criteria Capital One uses to grant or deny a limit increase request, let’s discuss why you might want a credit limit increase in the first place.

How to increase your credit limit with American Express and Barclays

Why increase your Capital One credit limit?

Capital One offers flexible credit cards for personal or business use that provide several benefits and perks, from bonus rewards and Uber ride discounts to  cashback and 0% intro APR promotions. While the perks of using a Capital One credit card are nice, if you are spending near or close to your limit each month, your credit may be taking a negative hit. It’s important to ensure you’re using credit cards for convenience and to improve your credit, not because you need them in order to get by.

Keeping your utilization below 30% of your credit limit each month is ideal for credit-building. Plus, if you are spending less than 30% of your credit limit, it will be easier to pay off the balance in full in month, allowing you to avoid paying high interest rates. Even if your card currently has a 0% APR for a limited time, it’s best to get into the habit of paying off your balance in full each month, because that promotion won’t last forever.

With that being said, a credit limit increase may help improve your credit score, just as long as you don’t inflate your spending. If you keep your spending at the exact same level after the credit limit increase, your utilization will automatically drop. For example, say you spend $300 a month on a card with a $1,000 limit – a 30% utilization rate. You requested an increase and now have a $2,000 limit, but continue to spend just $300 a month. Without doing anything differently, you’ve lowered your utilization to 15%, which could help improve your credit score.

What to know when considering a Capital One Credit Line increase

Capital One allows users to request a credit line increase either online or by phone. Accounts not eligible for a credit line increase include those that are less than three months old, as well as those that have received a credit line increase or decrease within the past six months.

When you submit a credit line increase request, Capital One looks at a variety of factors, such as on-time payment history, average monthly payment amount and your credit score. A credit score of 700 and above is generally considered good.

They will also look at your current utilization rate. If you are responsibly using your card and paying more than the minimum each month, this tells Capital One that you can handle potential increased monthly payments if they offer you a credit increase.

What’s nice about this process is that it will not negatively affect your credit. When you submit a request to increase your credit limit, Capital One will use the information they normally receive from the credit bureaus each month, so your credit report will not be pulled.

How to request a Credit Limit increase with Capital One

Requesting a credit limit increase is easy, and it only takes a few minutes. First, we’ll walk you through how to do it online, then explain how the phone option works.

Step 1

Once you’ve logged in, click on ‘I Want To…”.

Step 2

Under Offers and Updates, click on Request Credit Line Increase.

 

Step 3

Fill out the short form to the best of your ability, then click Submit Request.

In some cases, Capital One says they can approve credit limit increase requests immediately. If they do not, you will be taken to a confirmation page. As stated on the confirmation page, Capital One will notify you with the outcome of your request in two to three business days if you are signed up for a paperless account, or within 10 business days if you receive paper statements.

If you prefer to request a credit line increase by phone, you can call 1-800-955-7070 and choose the ‘More Options’ prompt to get to the credit line increase request option.

What’s next?

If you’re denied a credit limit increase, Capital One allows you to apply again at any time, but there’s no guarantee your request will be approved. It’s best to work on addressing the reason or reasons why you were declined in the first place.

In addition to making payments on time, and making more than the minimum payment each month, Capital One recommends you keep your income and employment information up to date, as these factors are crucial for determining  if you’re eligible for a credit limit increase. They will also help you to build a strong credit score overall.

If you’re approved, your new credit line will be available immediately. Try to stick to responsible spending habits, and continue using your card wisely.

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.

Chonce Maddox
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Chonce Maddox is a writer at MagnifyMoney. You can email Chonce at [email protected]

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Credit Cards

Unsecured Credit Cards for Bad Credit

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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
20.24% - 26.24% 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: 20.24% - 26.24% Variable
  • Cash advance APR: 26.24% 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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on Discover Bank’s secure website

Rates & Fees

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Discover it® Secured

Regular APR
25.24% 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
Poor/New

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 8 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

Walmart Credit Card®

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on Walmart’s secure website

Walmart Credit Card®

Regular Purchase APR
19.15% - 25.15% Variable
Annual fee
$0
Rewards Rate
Save 3% on Walmart.com purchases including Grocery Pickup, 2% on Murphy USA & Walmart gas, and 1% at Walmart & anywhere your card is accepted.

Target REDcard™ Credit Card

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on Target’s secure website

Target REDcard™ Credit Card

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

Lowe’s Advantage Card

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on Lowe’s secure website

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

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on Home Depot’s secure website

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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on Capital One's website

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 they also offer a $49 or $99 deposit — but take caution 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 or $99 deposit instead of the $200 deposit depending on your creditworthiness. 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 5 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 $525 to $1,700. 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 $5 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
26.96% (Variable)
Credit required
bad-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
26.96% (Variable)
Credit required
bad-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

Total VISA® Credit Card

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on TOTAL’s secure website

Terms and Conditions

Total VISA® Credit Card

Annual fee
See Terms
Regular Purchase APR
See Terms
Credit required
bad-credit
Bad Credit
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, just 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.

On the plus side, one fee it doesn’t have is a credit limit increase fee. This is a fee some cards for people with bad credit charge when your credit limit increases, but the Total VISA® Credit Card does not charge this fee. So, going from a credit limit of $400 to $500 will not incur a 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 on a card with a $500 credit limit.

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Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at [email protected]

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