A credit card is one of the quickest and easiest ways to build credit — but if you have bad credit, most of the best credit cards are out of reach. That's when you turn to a credit card for bad credit. These cards are designed for one thing: establishing a positive credit history so you can improve your credit and qualify for better cards down the road. Show
But is there any value in getting more than one such card? There might be, but there are also some important considerations. Why apply for a credit card for bad credit?If your credit score is below 630, you may not be able to qualify for a regular credit card. A credit card for people with bad credit may be the best bet — and that will often mean a secured credit card. These cards require applicants to pay a refundable deposit, an extra guarantee that you’ll pay off your balance. Using a secured credit card helps you demonstrate that you can be trusted to pay your bills on time. Regular, responsible use of the card will gradually raise your score so you’ll eventually be able to apply for other cards, even the best credit cards out there. Why apply for more than one card?You don't need more than one credit card to build credit. You don't get any kind of direct credit score benefit from having two or more cards as opposed to one. But there are indirect benefits that could be gained by having more than one bad credit credit card. Credit cards for people with bad credit often have low limits, which can be challenging especially if you’re trying to increase your credit score. That’s because part of your score is determined by the percentage of your available credit that you’re using. For example, let’s say you only have one credit card, and it has a credit limit of $300. If you have a $150 balance on the card, you’re using 50% of your available credit — and that will hurt your score. Credit utilization should be below 30% if at all possible, which means charging no more than about $100 on a card with a $300 limit. It gets even trickier than that. Because you don’t know when the three credit bureaus — Equifax, Experian and TransUnion — will look at your credit history, you can’t risk having your credit utilization ratio be above 30% at any point during the month. So even if you pay your entire balance off each month, you need to make sure not to charge more that 30% at a time or risk bringing your score down. So additional cards may benefit you because they’ll increase your available credit and make it easier to make purchases without dinging your credit score. » MORE: I have only one credit card — is that a problem? What’s the catch?Every time you apply for a new card, your score slips by a few points. That's not a big deal when you have great credit, but when your credit is bad, every point counts. Applying for multiple cards in a short period of time makes lenders nervous, so be careful. If you’ve recently applied for a credit card for bad credit, don’t apply for another one right away — and don’t apply for cards you don’t need. Additionally, if you're building credit with secured cards, keep in mind that each card will require a security deposit, usually equal to the credit line. To open three secured cards with a $300 limit on each, you'll need $900 just for deposits. Featured Partner Offer Citi® Secured Mastercard®Regular APR26.24% (Variable) Credit ScoreNew to Credit Editorial Review The Citi® Secured Mastercard® is a no-frills option that can help build credit over time. It has no rewards, but also none of the excessive up-front or annual fees charged by many other secured cards. Pay on-time for 18 months, and you may be upgraded to an unsecured card. Steer clear of holding a balance to avoid the high APR. Pros & Cons
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Best Secured Credit CardsBest OverallDiscover it® Secured Credit CardUp to 2% Reward Rate Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earnRead More Welcome BonusCashback Match™ Regular APR25.99% Variable APR Credit ScoreNew/Rebuilding Credit Why We Picked It In the secured credit world, the Discover it® Secured Credit Card stands above the competition. With an unlimited 1% cash back rate on all purchases, plus 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, no penalty APR and no annual fee, we love this card for those who need to rebuild their credit. The matching cash back reward at the end of your first year is a sweet bonus. Pros & Cons
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Navy Federal MembersNavy FCU nRewards® Secured Credit Card *1X Reward Rate Earn 1X points per dollar spent Credit ScoreBad/Poor (0 - 649) Why We Picked It A secured card with no annual fees, no balance transfer fees and rewards, the NRewards is a solid choice for those who qualify and are eligible for the Navy Federal Credit Union. Pros & Cons
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Choosing Your Own Bonus CategoryBank of America® Customized Cash Rewards Secured Credit Card *Up to 3% Reward Rate Earn 3% cash back in the category of your choice: gas, online shopping, dining, travel, drug stores or home improvementRead More Regular APR26.99% variable Credit ScoreBad/Poor (0 - 649) Why We Picked It A secured card with no annual fee and the ability to earn rewards, this Bank of America card can provide a way forward for those needing to build their credit profile. Pros & Cons
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Choosing Your Own Bonus CategoryU.S. Bank Cash+® Visa® Secured Card *Up to 5X Reward Rate 5% cash back on on the first $2,000 in combined eligible purchases each quarter in two categories of choice, 2%Read More Regular APR28.99% variable Credit ScoreBad/Poor (0 - 649) Why We Picked It Not only does it earn rewards, which is rare among secured cards but you can choose your own bonus adventure from a list of several everyday common spending areas. Pros & Cons
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Flat-Rate Cash BackBank of America® Unlimited Cash Rewards Secured Credit Card *Unlimited 1.5% Reward Rate Earn unlimited 1.5% cash back on all purchases Regular APR26.99% variable Credit ScoreBad/Poor (0 - 649) Why We Picked It Earns an easy-to-manage 1.5% cash back on all your spending without tracking categories or spending caps. Pros & Cons
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Earning PointsU.S. Bank Altitude® Go Visa® Secured Card *Up to 4X Reward Rate Earn 4x points on dining and takeout, 2x points at grocery stores, gas stations and on streaming services and 1xRead More Regular APR28.99% variable Credit ScoreBad/Poor (0 - 649) Why We Picked It If your biggest expenses are on dining and takeout, this is one of the best secured card offers available. Pros & Cons
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Low Interest RateFirst Progress Platinum Select Mastercard® Secured Credit CardNo Rewards The First Progress Platinum Select MasterCard® Secured Credit Card does not offer rewards on purchases. Regular APR17.74% (Variable) Credit ScoreBad Credit (0 - 649) Why We Picked It One of a small handful of secured cards where a recently discharged bankruptcy won’t automatically disqualify you from getting approved. Pros & Cons
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Earning Back Your DepositCapital One Quicksilver Secured Cash Rewards Credit CardRegular APR28.49% (Variable) Credit ScoreLimited, Bad Why We Picked It For those who don’t mind paying a security deposit to unlock access to rewards earning, this card may be worth considering. Pros & Cons
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The Best Secured Credit CardsMethodologyTo determine the best secured credit cards, we looked at secured credit cards offered by large banks, small to mid-sized banks and credit unions. We considered whether or not cards earned rewards, fees, deposit requirements and offered the ability to graduate to a non-secured card in our rankings. How to Pick a Secured Credit Card
Frequently Asked Questions (FAQs)What is a secured credit card?A secured credit card is a credit card backed by a security deposit. Before approval, you will deposit money into a bank account and won’t be able to access it while you have the card. Your secured card credit limit will be equal to the amount of your deposit. How does a secured card work?A secured card works like any other credit card, with one big difference: Your credit limit will be determined by the amount of cash you put in a deposit account to guarantee the credit line. Do secured credit cards help build credit?Yes. Secured credit cards payment records will be reported to at least one of the major credit agencies. This means a good payment record will build credit but also means skipped payments or defaults will lower your credit score. The best secured credit cards will report to all three credit bureaus. How fast will a secured card build credit?Secured cards report monthly to the credit bureaus, but it is entirely up to the credit bureaus how they use said payment information. In general, some banks offering secured credit cards will offer a ‘’graduation” to an unsecured credit card after making on-time payments for a specified or unspecified number of months. Which banks offer a secured credit card?Many banks offer secured credit cards. Some of those banks are smaller banks, but among the big banks that offer secured credit cards are Discover, Bank of America and U.S. Bank. What is the best secured credit card?The best secured credit card for you may not be the best for the majority of consumers. For a combination of low cost to carry, rewards and opportunity to improve your credit, consider the Discover It® Secured. What is the difference between secured and unsecured credit cards?The main difference between secured credit cards and unsecured credit cards is that an unsecured credit card will not require a security deposit. Your credit line will be determined by the bank. A secured credit card requires a deposit and your credit line will be equal to said deposit. Other Credit Cards To Be ConsideredInformation provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results. Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners. Is it OK to have two secured credit cards?Yes. Two secured credit cards can help more than one because using a second secured card responsibly will increase the amount of positive information that gets reported to the credit bureaus each month.
How many credit cards should I have to rebuild credit?If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended. This combination may help you improve your credit mix. Lenders and creditors like to see a wide variety of credit types on your credit report.
Does a secured card build credit faster?Provided your lenders report your payment history to the three nationwide consumer reporting agencies, a secured credit card can be a powerful tool for building and improving credit. Secured credit cards may be especially helpful for high-risk borrowers or those with little to no credit history.
How much can a secured card raise your credit score?If you properly manage your secured credit card, you could see a 200 point increase to your credit score within 12 months. If you have bad credit, a score in the 500s or below, opening three secured credit cards and a credit builder loan can get you into the 700s within 12 months.
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