Banking and Finance

The Best Credit Cards for Bad Credit in 2021

July 27, 2021

Despite being a rough year financially, 2020 saw an increase in the average American credit score by nearly ten points. According to Experian, the average FICO score is now at 711, which is quite impressive given that the average credit score needed to purchase a home in the US is only 620.

If you’re like the majority of Americans and you had a rough 2020, perhaps you’re credit isn’t looking as hot as it could. That’s okay! There are actually quite a few credit cards for people with bad credit. Secured credit cards are the obvious choice here as most people with poor credit are approved for these cards with a deposit. However, in 2021, there are unsecured credit cards that you can also qualify for if you have bad credit.

What Are the Best Credit Cards for People with Bad Credit in 2021?

1. Discover it Secured

Secured credit cards work the same as unsecured credit cards except that you “secure” them with a deposit. Because you pay a deposit (usually between $50 to $200), you’re able to qualify for the card even with bad credit. And, fewer secured credit cards offer as many perks as the Discover it Secured card does.

To get a Discover it Secured credit card, you have to make a minimum deposit of $200. During the first eight months, that $200 will be your monthly credit limit. After eight months of on-time payments and responsible usage, they’ll review your account and see if you qualiffy for an unsecured card. If you do, they’ll give you back your deposit, send you a new card, and raise your credit limit!

That’s not all, though. The Discover it Secured card is one of the best credit cards for people with bad credit due to the fact that you earn rewards. Enjoy 2% cashback at gas stations and restaurants with 1% unlimited cashback on all other purchases. 

Pros & Cons:

✅ Rewards (very few secured credit cards offer rewards, especially to those with bad or non-existent credit)

✅ No annual fee

✅ No foreign transaction fees

❌  High APR (pretty standard for secured cards, though)

❌  Minimum $200 deposit

2. OpenSky Secured Visa

The OpenSky Visa is another great option for people with bad credit as it’s one of the best secured credit cards of 2021. It’s also great for those with zero credit history or those without a Social Security number. Why? It doesn’t require a credit check at all to be approved! Similarly to the Discover it Secured card, the minimum deposit is $200, but you’re able to set your credit limit if you’d like to increase your deposit (up to $3,000).

In terms of perks, it doesn’t rank too well as it’s missing the standard cashback perks you get with the Discover it Secured card. However, the fact that it doesn’t require a credit check is pretty unheard of. It’s the perfect credit card for rebuilding your credit card or for those who have recently arrived to the US and need to build their credit little by little.

Pros & Cons:

✅  No credit check required

✅  Reports to all three major credit bureaus

❌  Minimum $300 deposit

❌  No rewards

❌  $35 annual fee

3. Credit One Bank Visa for Rebuilding Credit

As the name suggests, this card is specifically designed for those who need to rebuild their credit. It’s a secured card that works different from other secured cards on this list. For example, you’re able to take out a $300 line of credit by paying a deposit of just $95. And, unlike most other secured cards, you are able to enjoy 1% cashback on all of your purchases.

Other added perks include the ability to choose your monthly payment date (if the 1st just doesn’t work for you), and access to the Credit One mobile app. The average credit range needed to qualify for this card ranges from poor to good, meaning that those with credit scores under 600 can still qualify. However, they might require that you pay an annual fee if your credit score is on the lower end.

Pros & Cons:

✅  1% cashback

✅  Lower deposit required

✅  Chance to increase your credit line over time

❌  High APR

❌  Potential annual fee depending on your credit score

4. AvantCard

Looking for the best credit card for bad credit in 2021 that doesn’t require you to put down a deposit? The AvantCard is the card for you. It comes with a $0 deposit minimum in exchange for a $39 annual fee, which is a pretty good tradeoff for those looking to build their credit without putting money into an account as a deposit.

The AvantCard reports to all three major credit bureaus and they make the application process fairly easy. If you’re a college student and don’t like your pick of credit cards for students, the easy application for this card might make it appealing to you (on top of the $0 deposit). Over time, they periodically review your account to see if you’re eligible for a credit limit increase.

Pros & Cons:

✅  No deposit required

✅  Easy application process

❌  $39 annual fee

❌  No rewards

❌  High APR

5. Self Credit Builder Secured Visa

The Self Credit Builder Secured Visa card is another great option for those with extremely bad credit as it doesn’t require a credit check. You can be approved by simply providing a deposit. Then, you’re able to start building your credit with on-time payments. After three months, if you have $100 in your savings account and have made on-time payments each month, you’ll be eligible for an upgrade to an unsecured card for free.

While it’s a secured card, the deposit required is only a one-time $9 fee plus $25 for the card itself. After the first month, you’ll pay a monthly fee (you choose how much that is) that goes straight to your savings account. So, you’re saving money while building your credit. It doesn’t get better than that!

Pros & Cons:

✅  No credit check required

✅  Monthly deposit goes into your savings account which they’ll return to you after 24 months

✅  Great mobile app that helps you save and set reminders for payments

❌  Even though the monthly fee goes into your savings, you can’t access it right away

Save Money Without a Credit Card

If you need to save more money before applying for another credit card (a good strategy, by the way, for those who find that they have trouble paying off their credit card bills each month), then we suggest trying out a savings-optimized debit card first.

The benefit of a debit card that’s optimized for rewards and savings is that it acts as a credit card in terms of the perks. However, there are no annual fees, no payments to make, and no risk of hurting your credit even more. 

Plus, you get all of these other hot perks (at least if the card you’re using is the Cheese Debit Card):

❌ No Monthly Fee                                     🧀️ $5 cash bonus    

❌ No ATM Fee                                          🧀️ Up to 10% cashback with every purchase/transaction

❌ No Overdraft Fee                                   🧀️ Potential Double Cheese Cashback

❌ No Insufficient Fund Fee                       🧀️ Up to 3% Deposit Bonus

❌ No Minimum Balance Requirement      🧀️ Early Paycheck

Don’t forget to sign up for your Cheese Debit Card here and build your wealth before you begin building your credit.