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It may seem counterintuitive, but one of the best ways to improve below-average credit is to get a credit card. The right card can help you build credit without getting in over your head and may even help you earn rewards.
If you need to turn your credit around, here are three credit cards to check out.
Rewards: 2% cash back on up to $1,000 in quarterly spending at gas stations and restaurants; 1% cash back on other purchases.
Sign-Up Bonus: This Discover card will match the cash back you earn in the first year.
Annual Fee: $0
Annual Percentage Rate (APR): Variable 23.99% APR on purchases; 10.99% APR for six months on balance transfers, then variable 23.99% APR.
Why We Picked It: This secured card earns cash back rewards and helps you build credit over time.
For Your Credit: You’ll need a security deposit of at least $200 to open an account, and your initial credit line will equal the amount that you’ve deposited. Other than that, the card functions just like a normal credit card. After eight months, Discover will start reviewing your account and may refund your security deposit if you’ve been using your card responsibly.
Drawbacks: If you don’t own a car or dine out often, the rewards aren’t as valuable.
Sign-Up Bonus: None
Annual Fee: $0
APR: Variable 24.99% on purchases and balance transfers.
Why We Picked It: After a short period of timely payments, Capital One will increase your credit limit.
For Your Credit: This secured card requires a deposit of $49, $99, or $200, depending on the state of your credit, to secure an initial credit line of $200. After five months of timely payments, Capital One will give you a free credit limit increase, which can result in stronger credit.
Drawbacks: There are no rewards.
Rewards: 1.5% cash back on all purchases.
Sign-Up Bonus: None
Annual Fee: $39
APR: Variable 24.99% APR on purchases and balance transfers.
Why We Picked It: Consumers with fair credit can earn a competitive cash back rate.
For Your Credit: If your credit isn’t awful but still needs some work, this card is for you. It’s intended for those with fair credit but still earns 1.5% cash back on every purchase.
Drawbacks: There’s a $39 annual fee.
How to Choose a Card for Turning Your Credit Around
Improving your credit should be your main financial priority, and you should choose a card that will help you accomplish that goal. All other considerations, including rewards and perks, should come second. Make sure to pay close attention to the fees and APR costs associated with any card you’re evaluating.
You will need to decide whether a secured or unsecured card is best for you. While secured credit cards require an up-front investment and have low spending limits, they are offered by major credit card issuers and are usually optimized to help you build credit. Unsecured cards don’t require a deposit but might have higher fees and are harder to manage if you’re new to credit.
Some cards prey on people with bad credit by offering unfair terms and policies that actually make it harder to rebuild credit. Check out our list of red flags so you know how to spot a bad deal.
What Is Required for a Credit-Building Card?
Credit cards for people with poor credit are not as strict with credit requirements, but approval is never guaranteed and applicants can still be rejected. Before you apply, you should check your credit score. You can do that for free at Credit.com.
At publishing time, the Discover it Secured Card, the Capital One Secured Mastercard, and the Capital One QuicksilverOne Cash Rewards Credit Card are offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for any of these cards. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved, or otherwise endorsed by the issuer(s).
Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.