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What Is the Best Credit Card Option for Someone with Bad Credit?


What Is the Best Credit Card Option for Someone with Bad Credit?

It is important to understand that all plastic is not created equal. Because of this fact many consumers become very confused when trying to choose which type of credit card is best for them. Consumers with no credit or bad credit really only have 3 options to consider when deciding which credit card is best for them: the prepaid debit card, the unsecured subprime credit card, or the secured credit card. Here are a look at the pros and cons of all 3 card types.

Prepaid Debit Cards

When a consumer purchases a prepaid debit card she has the ability to load her own funds directly onto the card. The cards are relatively easy to find - they are available at gas stations, retail stores, and Western Union stores - and literally anyone can purchase them. A consumer does not fill out an application to receive a prepaid debit card, she simply buys it. Once the card is purchased and loaded with funds, it acts just like a gift card. A consumer can use all of the funds available on the card (minus any fees) and then either reload the card or trash it.

Although prepaid debit cards are easy to find and even easier to obtain, there are plenty of reasons to think twice before choosing to use a prepaid card. First, prepaid debit cards do not offer any credit building opportunities for consumers. Why not? The reason prepaid debit cards offer zero credit building opportunities is because prepaid credit cards are not included on credit reports. Ever. Period. If you have heard differently, you have heard wrong. Additionally, prepaid cards do not offer the same fraud protections available through traditional credit card accounts. If a consumer has a prepaid debit card stolen which was loaded with $200 then it is as if she just lost $200 in cash. Finally, although prepaid cards do not offer fraud protection or credit building opportunities, they can still be loaded with fees.

Unsecured Subprime Credit Cards

Another plastic option which is available to consumers with no credit or damaged credit is the unsecured subprime credit card. Unsecured credit cards are the most common type of credit cards. They must be applied for, an approval must be granted, and (if a consumer is approved) a credit limit is assigned to the account. Unlike prepaid debit cards, unsecured subprime credit cards do offer credit building opportunities since they typically report to all 3 of the major credit bureaus each month - Equifax, Trans Union, and Experian. Plus, if a consumer is approved for one of these accounts, she does not have to put down a large deposit in order to secure her new line of credit.

Unfortunately, the primary draw back when it comes to these types of credit cards is the fact that they are usually loaded with high interest rates and incredibly high fees. It is not uncommon for an applicant to be approved for an unsecured subprime credit card only to receive a card which is practically maxed out as soon as it is issued due to all of the initial fees associated with opening the account. CLICK HERE to read more about how high balances on credit card accounts are bad for credit scores.

Secured Credit Cards

The best option for consumers with bad credit or no credit is, without question, the secured credit card. Secured credit cards, like unsecured subprime credit cards, offer great credit building opportunities when managed properly. However, secured cards typically offer this credit building opportunity without the often astronomically high fees associated with unsecured subprime credit cards. They are actual credit cards, unlike prepaid debit cards, which usually report to all 3 credit bureaus.

When a consumer is approved for a secured credit card she is required to make a deposit with the issuing bank which will be equal to the credit limit on the card. For example, if a consumer makes a $300 deposit then she would receive a secured credit card with a limit of $300. The deposit, however, is not the same as loading funds onto a prepaid debit card. If the consumer charges $25 on her secured credit card then she is responsible to pay the funds to the bank as they are not merely deducted from her initial deposit. Secured credit cards also typically offer very easy qualification standards so it is relatively easy to qualify for a secured card even for consumers with no credit or damaged credit.

How to Choose

Regardless of which type of plastic you choose it is important to do your research first. Comparison sites like allow consumers to view the rates and fees associated with multiple cards before they ever apply for an account. 


Michelle Black is an author and a credit expert with over a decade of experience, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, a contributor to the Wealth Section of Fort Mill Magazine, and  a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here. 


Do I Have Too Many Credit Cards?


Do I Have Too Many Credit Cards?

Credit cards can have a big impact upon your credit scores. Because of this fact, many credit savvy consumers often wonder about the ideal number of credit cards to have open. These consumers often pose questions such as “do I have too many credit cards?” or “should I open more credit cards?” or even “should I close some of my credit cards?” However the question is worded, what the person asking the question really wants learn is the perfect number of credit card accounts needed in order to achieve the best credit rating possible. Unfortunately, the idea that there is a magical number of credit cards needed in order to reach some credit score sweet spot is a bit of a myth.

Managing Your Credit Cards

Instead of focusing your energy on finding the right number of credit cards to open, you should instead shift your focus to how you should manage your credit cards. Credit scoring models, like FICO, pay a whole lot of attention to something called your revolving credit utilization ratios. For all of you non credit nerds, revolving credit utilization ratio is a credit industry term used to describe the relationship between your credit card balances and your (open) credit card limits.  The formula used to calculate your revolving credit utilization ratio can be a little complicated, but the principle behind the formula is pretty simple to understand. It is important to keep your revolving utilization ratios low at all times. The higher your credit card balances, the worse the impact will be upon your credit scores. As a rule, you never want to revolve credit card debt from one month to the next.

How Does My Number of Open Credit Cards Impact My Credit Scores?

If you have been paying attention so far then you may already realize that the question above is actually a trick question. Remember, how you manage your open credit cards determines the impact which those cards will have on your credit. The truth is that there is no right number of credit cards to have open. You could have 20 open credit card accounts, all with zero balances, and have very good credit scores. Conversely, you could have a mere 2 credit cards which were maxed out (meaning that you charged the cards up to the full, available balance) and your credit scores would probably be impacted very negatively.

What If I Don’t Have Any Credit Cards At All?

If you currently do not have any credit cards, then it is a good idea to start “shopping” for a little plastic. CLICK HERE to compare credit card offers, rates, and benefits. Find the cards which are the most appealing to you and apply. Note: if you currently have no credit or bad credit then starting out with SECURED CREDIT CARDS may be your best option. Once you have the cards, be sure to manage them well and commit to never charging more than you can afford to pay off that same month.

You will find people who disagree with me and believe that credit cards should be avoided at all costs. And yes, credit card debt should be avoided. I agree 100% that credit card debt is a bad thing. Credit card debt will cost you a lot of money and it will harm your credit scores. However, properly managed credit cards with zero balances are an excellent way to build positive credit. Building positive credit can help to set you up for success in life (i.e. lower interest rates on your mortgage, lower insurance premiums, lower utility deposits, etc.). In fact, building healthy credit is one of the most important goals you can have.

Michelle Black is an 12+ year credit expert with HOPE4USA, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, a contributor to the Wealth Section of Fort Mill Magazine, and  a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, budgeting, and recovering from identity theft. You can connect with Michelle on the HOPE Facebook page by clicking here. 

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