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Credit Cards

Home Depot Credit Card vs. Lowe’s Credit Card

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.

Updated June 28, 2018

Home improvements can be extremely costly and many people don’t have the money to pay for them upfront so they look to special financing options like store credit cards. If you’re looking to make renovations to your home, there’s a good chance you’ve looked into buying supplies from two of the biggest home improvement retailers in the U.S. — Home Depot and Lowe’s. Both stores offer special financing options and discounts that you can utilize to make your purchases more affordable.

In this post, we compare the key features of the Home Depot Consumer Credit Card and the Lowe’s Advantage Card, and provide you with our top pick for your next home improvement project.

We also discuss a few alternative financing options because credit cards aren’t always the best financing option — especially if you can’t afford to pay them off quickly.

Home Depot Consumer Credit Card vs. Lowe’s Advantage Card


Home Depot Consumer Credit Card


Lowe’s Advantage Card


Winner


Annual Fee

None

None

Tie


Regular Purchase APR

17.99%-26.99% Variable

26.99% Variable

Home Depot (so long as your credit is good enough to score the better rate).


Everyday Financing

6 Months Every Day Financing on Purchases of $299 or More. No interest if paid in full within 6 months.*

6 months special financing on purchases of $299 or more. No interest if paid in full within 6 months.*

Tie


Project Financing

Up to 24 months during special promotions.*


(Note that Home Depot offers a Project Loan Card with a fixed rate and 84 months to pay off purchases.)

Special fixed-rate interest offers for 36, 60 or 84 months and on purchases of $2,000 or more.*

Lowe’s (they offer financing options greater than 24 months).


Fine print

“Interest will be charged to your account from the purchase date if the purchase balance is not paid in full within 6 months.”


This is called deferred interest and means you are responsible for all the interest you would have been charged during the 0% interest period if you carry a balance after the 6 months.

If you don’t pay in full within 6 months, “interest will be assessed on the promotional purchase from the purchase date.”


This is called deferred interest and means you are responsible for all the interest you would have been charged during the 0% interest period if you carry a balance after the 6 months.

Tie


New card member discount

Save $100 on your qualifying purchase of $1,000 or more. Valid 5/24-7/11/18.*

None

Home Depot


Everyday discount

No everyday discount, but rotating limited time offers for a variety of products and services.*

5% off your eligible purchase.*

Lowe’s (since Home Depot doesn’t offer a discount).

Apply Now Secured

on Home Depot’s secure website

Apply Now Secured

on Lowe’s secure website


The Overall Winner: Lowe’s Advantage Card


The Lowe’s Advantage Card is the winner in this comparison since it offers a consistent, everyday discount and several financing options. Both cards offer the same everyday financing option, but the Lowe’s Advantage Card offers more options for project financing, which may be more beneficial for a home financing project. The Home Depot Consumer Credit Card unfortunately doesn’t offer everyday discounts or long-term financing options past two years, though it does have the potential for a lower APR with its range; unlike the Lowe’s Advantage Card which only has one APR. All in all, the Lowe’s Advantage Card provides more benefits to consumers looking to finance a home improvement project.


Apply Now Secured

on Lowe’s secure website

*Terms and conditions apply.

What to know before you open a store card for home improvements

Focus on your needs vs. rewards. Prior to applying for a store card, try not to let the promise of a cushy reward offer cloud your judgment. Consider which store you shop more and which store card has offers that suits your needs best.

For example, if you’re planning on doing exterior installations like roofing, siding or windows, Home Depot has no interest if paid in full within 12 months on purchases of $5,000 or more (offer valid until 1/31/18). Meanwhile, Lowe’s offers 5% off your eligible purchase, which can be helpful if you plan on making numerous purchases below $299 — since the 5% discount can’t be combined with special financing discounts that start at $299.

Decide how long you need to finance your improvements. Home Depot and Lowe’s both offer different financing options where you can pay a fixed interest rate for up to 84 months. While the Home Depot Consumer Credit Card only offers up to 24 months financing, they have another card, the Project Loan card, offering 84 months financing at a fixed 7.99% with a 6-month buying window to purchase needed products and services. On the other hand, the Lowe’s Advantage card offers project financing on any in-store purchase of $2,000 or more: 36 fixed monthly payments at 3.99% APR until paid in full, 60 fixed monthly payments at 5.99% APR until paid in full or 84 fixed monthly payments at 7.99% APR until paid in full.

Review selection offerings. Another key point to consider is that one store may have a better rewards program, but you may prefer the selection of items at the other store.

Consider access to the retailer. If you’ve never shopped at either store, do some research to see which one has more items you need. Also, check out the location of the stores — Home Depot has over 2,200 while Lowe’s has over 1,700. It may not make sense to apply for a Lowe’s card and trek 30 minutes to the nearest store if there’s a Home Depot around the block.

Read the fine print. Another key point to look at are the terms and conditions for each card. You want to check if there are any unusual fees and what the interest rates are if you carry a balance. This information can be a deciding factor in your decision. As you can see from our review, both Home Depot and Lowe’s credit card offerings carry a deferred interest clause — if you don’t pay off your balance by the time the promotional period ends, you could get hit with a hefty interest charge.

Take note that a store card can only be used at the issuing store, meaning you will only be able to use a Home Depot credit card on Home Depot purchases. Meanwhile, regular credit cards have more flexibility and can be used anywhere.

Other ways to finance a home improvement project

There are several other options for you to utilize if you decide that a store card from Home Depot or Lowe’s isn’t the best choice. There are other types of credit cards you can choose, such as cards with long 0% intro periods or cashback cards that offer high rates. Besides credit cards, you can take out a personal loan, home equity loan or home equity line of credit. Below, we detail what other options you have for your home improvement project and the pros and cons associated with each.

0% Intro APR cards

An alternative to store cards are 0% intro APR cards, which provide a period of time for you to carry a balance without racking up interest. The better 0% intro APR cards have intro periods of 18 months, allowing you well over a year to pay off debt from new purchases. These cards often offer longer 0% intro periods than store cards, and although they won’t have store specific rewards, you can benefit greatly from the long intro period.

Pros:

  • Long intro periods: The 0% intro periods for these cards are longer than those provided by store cards and can provide you with as long as 18 months interest-free.
  • Wide acceptance: These cards can be used at any store, unlike store cards, which are restricted to the issuing store.

Cons:

  • Often lack rewards or store specific discounts: Many 0% intro APR cards lack rewards programs or don’t provide store specific discounts like the Home Depot or Lowe’s cards.

Cards to Consider

Citi Simplicity® Card - No Late Fees Ever

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The information related to Citi Simplicity® Card - No Late Fees Ever has been 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

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

Citi Simplicity® Card - No Late Fees Ever offers a competitive intro 0%* for 12 months on Purchases*, then 16.24% - 26.24%* (Variable) APR applies. This is one of the longest intro periods for purchases available and can provide you ample time to pay off your debt. Other great features of this card include no late fees, no penalty rate and a $0* annual fee. Although there are no rewards, the long 0% intro period can provide more benefit if you can’t pay off purchases within the short 0% periods of the Home Depot or Lowe’s cards.

U.S. Bank Visa® Platinum Card

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on US Bank’s secure website

U.S. Bank Visa® Platinum Card

Regular Purchase APR
14.74% - 25.74%* (Variable)
Intro Purchase APR
0%* intro for 20 billing cycles on Purchases*
Intro BT APR
0%* intro for 20 billing cycles on Balance Transfers*
Annual fee
$0*
Balance Transfer Fee
Either 3% of the amount of each transfer or $5 minimum, whichever is greater.
Credit required
good-credit
Excellent/Good

The U.S. Bank Visa® Platinum Card offers an 0%* intro for 20 billing cycles on Purchases* on purchases (after, 14.74% - 25.74%* (Variable) APR applies). This is a great length of time for you to pay off any purchases you make, regardless if they’re for home improvement or not. The APR range for this card has a low starting rate, promising if you have Excellent credit. Besides the 0% intro period, this card is fairly basic and has no rewards.Read our guide to the longest 0% purchase credit card offers and use our personalized tool to compare introductory 0% interest cards.

Cashback and rewards cards

Another alternative to a Home Depot or Lowe’s credit card may be cashback or rewards cards. These cards offer rewards for all your spending, with some offering higher rates on select purchases and 0% intro periods. Often, these cards provide more long-term value than a store card you may open since they don’t limit your purchases to select stores.

Pros:

  • Versatile rewards programs: These cards provide rewards or cashback programs that allow you to earn rewards on all your spending, regardless of where you shop. Some cards even offer high rates on certain purchases, like home improvements.
  • Wide acceptance: There are no restrictions on where you can use these cards, and you earn rewards on all purchases.

Cons:

  • No store discounts: Since these cards aren’t store cards, you most likely will not receive the same store discounts or rewards that a store card offers.

Cards to consider

The Farmers® Rewards Visa® Card from Comenity Bank

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on Comenity Bank’s secure website

The Farmers® Rewards Visa® Card from Comenity Bank

Annual fee
$0
Rewards Rate
3X points for $1 spent on Farmers products, 3X points for $1 spent on Fuel / Gas, 3X points for $1 spent on Home Improvement, 1X points for $1 spent everywhere else Visa is accepted
Regular Purchase APR
14.74% to 21.74% Variable
Credit required
good-credit
Excellent/Good

The Farmers® Rewards Visa® Card from Comenity Bank offers a high 3X points for $1 spent on Farmers products, 3X points for $1 spent on Fuel / Gas, 3X points for $1 spent on Home Improvement, 1X points for $1 spent everywhere else Visa is accepted. Each account anniversary you receive 1,000 points (equal to a $10 statement credit). Although you earn points, they can be redeemed as a statement credit with 1 point worth $.01. This card offers more flexibility than a Lowe’s or Home Depot card since it can be used anywhere. The intro period is also longer with a 0% introductory purchase APR for 12 months. After that your APR will be 14.74% to 21.74% Variable APR.

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

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

The Citi® Double Cash Card – 18 month BT offer is the trend setting flat-rate cash back card where you can earn cash back twice on every purchase. You Earn 2% cash back on purchases 1% when you buy and 1% as you make payments for those purchases. Points are redeemable for statement credit with 1 point worth $.01. This card allows you to earn a high, consistent cash back rate on all spending without limiting you to select categories or stores. With this card, you have the freedom to use it anywhere and can see more long-term value compared to a store card you may only use for a home improvement project.Read our roundup of the best cash back cards for every category and compare cash back cards.

Personal loans

Depending on your situation, a credit card may not be the best option; especially if you have less than perfect credit and can’t get approved. A personal loan is when you borrow a fixed amount of money for a fixed time period at a fixed rate.

Personal loans are a more liquid approach to financing a home improvement since you receive deposited money in your bank account. The interest rates for personal loans vary by issuer and your creditworthiness, but if you’re someone with excellent credit you may receive the lowest rates, with some issuers offering as low as 3.24% APR. That’s substantially lower than a credit card.

On the other hand, you may find some personal loan lenders willing to work with you if you have bad credit, although you are likely to get stuck with a pretty high APR. Some APRs can easily run above 30% on the high end.

Pros:

  • Better approval odds: If you’re someone with bad or fair credit, you may have an easier time qualifying for a personal loan compared with a credit card. Some personal loans either don’t have a minimum credit score or accept people with low scores.
  • Fixed interest rates: Unlike the majority of credit cards, personal loans have a fixed interest rate. You don’t have to worry about your rate increasing during your term.
  • May be able to check your rates without harming your credit: Some personal loans allow you to see if you prequalify by performing a soft pull of your credit. A soft pull doesn’t affect your credit score, and with many personal loans you can shop around for the best rate without harming your credit. Just be careful and read the disclaimers before you check to make sure it’s a soft pull — not a hard pull. Once you officially apply for a loan, they will do a hard pull.

Cons:

  • Origination fee: Some personal loans have origination fees. These fees are a percentage of the total loan amount. For example, a 1% origination fee on a $5,000 loan is $50.
  • Possible prepayment penalty: Some personal loans will charge a fee if you pay off your loan early, which can be more costly than riding out your term.

How to compare personal loan options

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on LendingTree’s secure website

LendingTree is our parent company

LendingTree

Loan Amount
up to $50,000
Term
24 to 60 Months
APR Range
As low as 3.99%
Origination Fee
Varies
Credit Required
Minimum 500 FICO®
Soft Pull
You can get your rate without hurting your score.

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

LendingTree has a great feature where you can compare personal loans from multiple issuers within minutes. You can select home improvements from the drop-down menu when asked “How are you going to use the money?” and continue with the prompts until you receive your personalized loan rates. This tool performs a soft pull on your credit so your credit score will not be affected by comparing rates.

We have a personal loan calculator that can help you see if a personal loan is a good option for your home improvement project:

Check out where to get the best personal loan rates online and use our personalized tool to compare personal loans.

Home equity loan or home equity line of credit

You may have heard the terms home equity loan and home equity line of credit (HELOC) before, and are now considering them as options to finance your home improvement project. Before you decide, it’s a good idea to know what these home equity options are and how they can be helpful — and potentially harmful.

A home equity loan is similar to a personal loan where you have a fixed loan amount, with a fixed interest rate and fixed term — but a home equity loan is secured by your home. This means your home is collateral and if you don’t pay your loan, the lender can foreclose on your home.

Similar to a credit card, a HELOC provides you with a revolving line of credit where you can borrow money and you only make payments on what you borrow. Any funds borrowed are charged interest, and unfortunately, the interest rates are often variable, which means they can increase at any time. You can withdraw funds with a credit card or check linked to your account. And, like home equity loans, your home acts as collateral if you don’t pay off your HELOC.

Pros:

  • Fixed interest for home equity loans: When you borrow money with a home equity loan, you receive a fixed amount of money for a fixed term and a fixed interest rate. This creates stability when repaying your loan and you don’t have to worry about increasing interest rates.
  • Revolving line of credit for a HELOC: With a HELOC, you receive a revolving line of credit. Similar to a credit card, when you make charges and pay them off, your available credit is replenished.

Cons:

  • Your home is collateral: If you don’t pay off your loan, the lender can take action against your home and possibly foreclose. This is a big risk that other financing options on this list don’t have.
  • Look out for fees: Home equity loans and HELOC can come with numerous fees like origination fee, lender fee, application fee, appraisal fee and more. It’s a good idea to ask questions and read the terms before signing anything.
  • You need equity in your home to qualify: Most lenders require you to have a loan-to-value ratio of 80% or below. To get your LTV, it’s pretty simple: add the amount you want to borrow with a home equity loan to the amount you still owe on the home. Once you’ve got that figure, divide it by the market value of the home. Let’s say you’re looking for a $10,000 home equity loan and you owe $80,000 on your mortgage. If your home is currently valued at $200,000, that would give you an LTV of about 45%.
  • Watch out for refinancing: Some lenders may pressure you into refinancing a loan that you’re struggling to pay off. By refinancing, the lender benefits from charging you more fees and interest points that end up hurting you and increasing your debt.

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.

Alexandria White
Alexandria White |

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

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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
Chonce Maddox |

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

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Won’t impact your credit score

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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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on Credit One Bank’s secure website

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

APPLY NOW Secured

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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