Think you can’t qualify for a credit card with a 550 credit score?
This is probably the first question that pops up in one’s head when the term “credit” comes up.
This is followed by another question. What are its consequences?
Before we move forward with reviewing the top 10 credits cards for a 550 credit score, let’s try and understand a 550 credit score and its repercussions when applying for a credit card.
What Is Bad Credit?
Bad credit or a low credit score refers to an individual’s inability to fulfill credit agreements. When you fail to make payments on time, you can end up with a low credit score. In order to avoid having bad credit, it is advisable to honor all obligations and credit agreements and make timely payments as and when required.
A bad credit or low credit score is estimated based on an individual’s credit history. Credit history details are collected via banks and other financial channels and accumulated in a credit report. This credit report is prepared by credit reporting agencies, also referred to as credit bureaus. Based on the information provided there, a FICO score is calculated with the help of software.
Credit scores usually begin from 300 and go up to 850, with 300 being a poor credit score and 850 the ideal.
Consequences of Bad Credit
Now, for the most essential part, how does a low credit score affect you? Well, firstly, you will have no luck with lenders, so if you require financing through borrowed money or loan, it’s hard to come by. Not just this, but all your credit applications will also be rejected by potential lenders including banks and other financial institutions.
For cases when you do receive a loan, interest rates offered will be sky-high. For lenders, this is justifiable. They cannot risk losing all their money in case you decide to disregard paying them back on time or paying at all in some of the most bizarre yet true cases!
Thus, if you are facing a credit score which is potentially bad, let’s say 550, you must consider the following top 10 credit cards to make your payments.
Top 10 Credit Cards for 550 Credit Score
If you have a low credit score, the quickest way out of this misery is to get yourself a credit card. Once you get one, you can use it every month and build up credit. Make sure to make all your payments within the specified time period. If you fail to honor payments on credit purchases, there is not much use of it. You can choose from the following top 10 credit cards and get on with improving your credit score.
This is the ideal option for people who are looking for a secured credit card with sufficient rewards and 0 annual fees. Its various features and benefits are given below:
- There is no annual charge on Discover it Secured. It allows cashback on each purchase and is recommended for people with bad credit scores to build their credit with responsible use.
- Since this a secured credit card option, you will be mandated to provide a refundable security deposit of at least $200.
- Complete bank information must be provided to the bank along with the security deposit.
- By the 8th month, your account will undergo a thorough review to decide whether you are eligible to move to an unsecured line of credit.
- Cashback of 2 percent or more is allowed on gas stations and restaurants for up to $1000 worth of shopping every quarter. Unlimited cashback of 1 percent on all other purchases is applicable.
- You can get a dollar-for-dollar for all cash back, annually.
- You are eligible to receive free Social Security Number alerts.
- APR of 24.49 percent (variable) applies.
- Balance transfer intro APR of 10.99 percent for 6 months applies.
- Balance transfer fee: 3 percent
- No foreign transaction fee applies.
This is another credit card that does not regard past bankruptcies, thereby extending credit card facilities to people who have a bad credit score and are seeking an unsecured line of credit option. It has the following features:
- The annual fee on the Milestone Gold MasterCard ranges from $35-$99. During the first year, the annual fee is likely to remain between $35 and $75. It will escalate to $99 from there onward.
- An account opening fee is also applicable, starting from as low as $5 and going all the way up to $50, based on your credit score.
- No security deposit is required.
- $0 cash advance fee applies during the initial year, which is likely to surge to $5 or 5 percent after the first year.
- A pre-qualification option is available with Milestone, which can be used to check for eligibility without affecting your credit score.
- Foreign transaction fee of 1 percent applies.
- APR of 23.9 percent applies.
- Penalty APR of 29.9 percent applies.
- Cash advance APR of 29.9 percent applies.
- Once you have improved your credit rating, you become eligible for a rewards program from Milestone.
- Previous bankruptcy is not a disqualifier in any way.
Indigo is another unsecured credit card option available to those with a lifelong history of bankruptcies on their credit report. If you are afraid that more than a single bankruptcy will hinder your chances of getting a credit card, stop thinking and apply for Indigo Unsecured MasterCard now! It offers this and much more.
- An annual fee of up to $99 is applicable on Indigo. For the first year, it may be $0 to $75 based on your credit profile and then escalate to $99 from then onward.
- No security deposit is required.
- A pre-qualification can help you decide whether or not you qualify for the credit card. This rescues you from a detailed credit inquiry on your credit profile.
- APR of 23.9 percent applies.
- A foreign transaction fee of 1 percent applies.
- If you pay your balance timely each month, not only can you avoid the penalty APR, but your credit score will also rise.
- An enhanced credit score renders you eligible for the rewards program.
- Previous bankruptcy is not a disqualifier for Indigo.
This credit card has been designed for those who are looking for unsecured card options with rewards, benefits and prequalification. Without a prequalification, most people are faced with a meticulous scrutiny of their credit profiles. This is what Credit One Bank Platinum Visa credit card has to offer:
- Annual fee of $0-$99 applies during the first year based on one’s credit profile.
- No security deposit is required.
- A prequalification makes the whole process easy, quick and all the more secure.
- You are eligible for 1 percent cash back on eligible purchases.
- After the first year, as soon as you have begun improving your credit score, rewards set in.
- Visa discounts are available to all members.
- Travel accident and auto rental collision insurance are covered through your Visa card.
- APR of 17.49-25.49 percent applies.
- Cash advance fee of 8 percent applies.
- Foreign transaction fee of 3 percent applies.
With its relatively low annual fee, First Progress Platinum Elite MasterCard is another one of those credit cards that require no credit card history or a minimum credit score to become an eligible cardholder. Here’s a list of some of its benefits and features:
- The maximum credit limit for all new cardholders is $2000.
- APR of 19.99 applies.
- Cash advances are charged at APR 24.99 percent. A cash advance fee of 3 percent or $10 applies, depending on whichever is higher.
- Annual fee of $29 applies.
- Penalty fees are higher at $38
- Returned payment fee of $27 applies.
- No sign-up bonus is available.
- No rewards program is offered by the Platinum Elite MasterCard.
- It reports to the 3 most renowned credit bureaus, thereby allowing cardholders to amend their credit score.
- No minimum credit score requirements.
- All members are eligible to receive a credit limit of $2000, provided that a sufficient deposit is made.
These credit cards are issued by USAA for those looking to build credit via a secured line of credit. The card is suitable for people with a credit limit of 550. Here’s a brief guide on the major features and benefits that this credit card extends to all users:
- Annual fee of $35 applies.
- Late payment penalty and returned payment fee of $35 each is applicable.
- No over-limit fee or foreign transaction fee involved.
- The card comes with a credit limit of $250 to $5000.
- APR of 11.4 to 21.4 percent applies.
- Variable balance transfer APR of 11.4 to 21.4 percent applies.
- Variable cash advance APR of 11.4 to 21.4 percent applies.
- No introductory rate offered on new purchases with USAA Secured Visa Card.
- It does not provide a rewards program, cash signup bonus and cash loyalty.
- It does offer additional benefits in the form of free credit score, auto rental collision damage waiver, emergency support, fraud liability, price protection, travel accident insurance, and travel assistance.
Among the various easy-to-get credit cards, this is yet another credit card option that is available for people with poor credit scores such as FICO 550. You can hope to boost your credit rating with this credit card without having to incur an annual fee, security deposits, or interest if your balance is sorted timely. In addition to all this, it offers the following features and benefits:
- In order to become a credit card holder of Walmart, you need a Walmart account as a prerequisite.
- All you need to do is improve your credit score by shopping frequently at Walmart while receiving in-store financing, sign-up bonus and cashback bonus of 3 percent on.
- APR of 24.40 percent applies to the Walmart Credit Card. The rates are different for the Walmart MasterCard based on account type.
- Free cash advances are available from any and all Walmart cash registers.
- Cash back of up to 3 percent is applicable on purchases from Walmart online. All other purchases qualify for a 2-percent cashback bonus.
- All new cardholders qualify for a bonus worth $25 for spending up to $25 daily.
- Cardholders can avail special promotional financing like no interest on purchases for a specified period of time.
With DCU Platinum Secured credit card, you can enjoy low-interest rates and zero annual fees. This is the best deal out there for people with a credit score between 300 and 600. Let’s explore a few of its amazing features and benefits:
- A flat rate of 13 percent APR applies to purchases, balance transfers, and cash advances.
- APR penalty for late payments is charged at 18 percent.
- No annual fee applies and there are no balance transfer fees either.
- Travel perks such as free travel insurance worth of $500,000 apply to all those cardholders who buy tickets on the card.
- Hotel room stays are also guaranteed despite late arrival/check-ins.
- Complimentary collision damage and theft insurance on car rentals are also provided to all cardholders.
- Extended warranty on most purchases is yet another benefit of the DCU Visa Platinum Secured credit card.
- Security deposit dictates credit limit. The minimum security deposit is $500, which also makes it the minimum credit limit.
- Your available credit will determine 30 percent of your credit score, so use this opportunity and amend your credit score for the better with DCU’s secured credit card.
People who are faced with a bad credit score usually resort to credit unions with hopes of achieving a better credit score. With no annual fee, American First Credit Union Secured Visa credit card is your safe haven if you are looking to build credit through a secured credit card option. Here’s what it aims to offer:
- It does not require an annual fee.
- APR of 10.5 to 18 percent applies.
- Cash advance fee applicable at the rate of 1.5 percent.
- Late payment fee for returned checks or drafts is $10, relatively lower than what other similar credit cards are charging.
- Foreign transaction fee of 1 percent applies.
- Although it does not offer a rewards program, its low rates and lowered fees should effectively compensate for all that.
- No signup bonus is available.
- Premium Visa card benefits include travel insurance and auto rental insurance.
- Credit Union credit cards are not much use if you don’t have ample cash reserve, primarily because 35 percent of your credit score is determined by available credit.
If you have a bad credit score and are looking for refundable security deposit while aiming to enhance your credit rating, no one understands you better than Capital One Secured MasterCard. With zero annual fees, you can build credit and become eligible for various other benefits that have been identified as follows:
- No annual fee is charged.
- Responsible usage can help build up credit, thereby improving credit score.
- Initial credit line worth $200 shall be provided after the security deposit payment of $49, $99 or $200 based on your credit profile.
- You can transition to a higher credit line by ensuring first 5 monthly payments on time.
- You can access and manage your account online around the clock via phone or through the bank’s own mobile app.
- APR of 24.99 applies.
- There is no penalty APR applicable.
- Cash advance rate of 3 percent applies to the amount for a minimum of $10.
- Foreign transaction fees are not applicable.
Essential Tips to Use Credit Cards Effectively
Now that you have applied for a credit card in order to improve your credit rating, your job is far from over. Using a credit card can be quite an art and with a few useful tips such as those given here, you can not only use your credit card wisely but also upgrade your credit score more efficiently.
Ensure Timely Payments
This is probably the most significant of all tips listed down here. If you make payments on time and develop a habit of doing so, you won’t have any remaining balance in your account. This means you won’t incur any interest charges or penalty fees whatsoever.
Make sure you have quick access to your account in order to keep track of all payments as soon as they are due. One missed deadline, and a hefty interest awaits you! Alternatively, you can set up a direct debit to pay all bills timely.
Beware of Hidden Fees
Usually, credit card issuing authorities cannot hide any charges from the cardholder, as required by the law. However, a lot of customers do not pay close attention to charges that are deemed necessary by the bank, and the cardholder has to pay them no matter what. Thus, understand all sorts of fees and charges that you could end up paying on your credit card.
These may include processing fees, late payment fees, transaction fees, credit exceeding fees, balance transfer fees and overdraft protection fees. You can have a bank representative walk you through all charges associated with the credit card so that you are well aware.
Don’t Keep Too Many Cards
Although people seeking to improve their credit score are prone to keep a high number of credit cards on hand, don’t do so unless necessary. With more credit cards, managing each one can get tedious. Plus, unless you have sufficient cash to make timely payments, having too many cards means you will fall behind on all payments, thereby incurring interest on outstanding balances. In this case, these balances span across a number of different credit cards, each one with its unique APR.
Moreover, if any one of these cards remains unused or inactive, banks will simply close it, so what’s the point anyway? Keep only one or two credit cards on hand and manage them well. This is a reasonable way to go about it.
Monitor Your Spending
This is another useful tip, which is hard to achieve too. The whole point of credit cards is not to worry about money, which can lead to mismanaged spending, overspending and impulse buying. If you are a shopaholic, it’s better to keep all receipts handy. We are not suggesting you stop spending altogether; all we are suggesting is to keep cross-checking your receipts against your monthly statement.
This monitoring can help you stay within a certain limit, exceeding which can cost you interest payments if monthly payments are not met. You can use the alerts feature on your mobile app in order to track all your spending.
Manage Debts in a Responsible Manner
Following from the previous point, you can manage your debt more efficiently by doing the following:
- Go for planned purchases rather than succumbing to impulse buying.
- Use credit cards only when you really need to, utilizing cash otherwise.
- Set up automatic payments as soon as you have sufficient cash, such as right after payday.
- Consolidate your debt with a balance transfer offer.
With the help of these tips, you can manage your cash flow responsibly without having to pay higher interest rates just in case you fall behind on payment.
Choose the Right Card
Another useful tip for those who travel internationally a lot more than usual is to be aware of foreign transaction fees related to each credit card you own. Thus, when you travel abroad, use the right card, which has the lowest or, best case scenario, zero foreign transaction fees. Higher foreign transaction fees can offset the value of rewards that most credit cards come bearing.
If you are not aware of these fees, consult your bank before setting out on your trip and have them explain all the fees and charges. This can save you a lot more money than you would anticipate.
Avoid Using a Credit Card for Minor Purchases
This tip will not only help you use your credit card more effectively, but it also lends support to the monitoring tip we have mentioned before. If you adopt a habit of using your credit card for all sorts of purchases, big or small, you might end up losing track of all of them. If you cannot monitor all your credit card expenditures, what good is that tip anyway?
A wise approach is to use a credit card only under two circumstances: when you run out of cash on hand and when you decide to make a purchase worth more than $100. This will benefit you in ways you don’t realize yet. When you are paying via cash for smaller purchases, you’ll find yourself spending much less than you’d otherwise spend if you were using a credit card. Credit card usage is analogous to self-pampering, which can lead to overspending.
If you have managed to adopt even a few out of all these tips, you have already mastered the art of using your credit card wisely and effectively. Here’s a shout out to all of you for achieving this milestone!
Credit Card FAQs
We have established quite a lot up till now, but this section is aimed to cover any minor or major information regarding credit cards that you might find useful if you have made up your mind about getting one. These FAQs may help you sort through any confusions you might have regarding credit cards.
1. What Is APR?
APR is an abbreviation for Annual Percentage Rate. It is basically the interest rate, also commonly known as the cost of borrowing money, which is charged on products such as credit cards, mortgages and loans.
APR incorporates the cost of borrowing and a few additional charges or fees that are related to your credit card. This is why you might find the actual interest rates to be slightly lower than APR. APR across different credit cards is never the same; it varies.
This rate is of two types: representative and personal. Representative APR is what you might get if your credit score is low. A personal APR, however, does not consider a credit score. Even with a good credit score, you might or might not get it.
2. What Are the Different Types of Credit Cards?
You can get your hands on any of the following types of credit cards:
- Standard Credit Card – The most basic of all credit cards is this one with a low APR and zero benefits. These are usually only used by people who are looking for financial flexibility.
- Credit Builder Credit Card – These high APR credit cards are generally used by people who have bad credit ratings. With a low credit limit, these cards are used to enhance credit score by ensuring timely payments each month.
- 0% Purchase Card – As the name suggests, for all purchases made during a specified period of time, you can benefit from 0 percent interest. If you cannot pay back in time, higher interest rates await you!
- Rewards Card – Similar to cashback credit cards, with the use of reward cards, when you spend money, you can achieve rewards such as loyalty points, travel discounts, coupons, and
- Store Card – This is what the Walmart Credit Card essentially is. On every purchase from the store, you can earn certain rewards.
3. Do I Always Pay Interest on Purchases Made Using a Credit Card?
No, this is not true. If you pay off your credit card balance each month, you will not incur anything in interest. Interest charges or the APR is applicable on the outstanding balance on your credit card. There are a few credit cards that offer 0 percent interest for the first few months, after which any and all outstanding balance incurs a certain interest charge.
4. How Do I Make the Monthly Payments?
You have a variety of options to choose from for paying off your monthly balance. You can make the payment over the phone, through cheque, via bank transfer, through cash at the bank branch, or by setting up a direct debit for paying the minimum each month. Choose a payment option that suits you as per your convenience. If you make timely payments, you will not be incurring hefty interest charges on any outstanding balance.
5. Why Was My Credit Card Declined?
Credit card payments are usually declined when online shopping. This is a possibility based on the following reasons:
- Exceeding the maximum number of transaction attempts. This is a security precaution put in place to avoid theft or fraud.
- The transaction seems dubious or fraudulent. These are usually blocked by the bank.
- Billing details fail to match with what you have submitted to your bank.
- Insufficient funds can lead to a decline.
- Exceeding the daily limit on your credit card.
- A large number of purchase transactions online will usually lead to credit card decline.
- Bank servers may be down or going through maintenance.
- International charges are sometimes declined as part of security protocol.
When you come across a decline, contact your bank or card issuer immediately and seek assistance.
6. What Is Meant by ‘Soft Search’?
Also known as smart search, this type of search enables people to browse for credit card deals you may qualify for prior to applying for a card. This is usually done by people who are trying to compare different credit cards in order to choose ones with the highest number of benefits and rewards. You can also compare rates with the help of a soft search.
7. What Is a Balance Transfer Card?
Using balance transfer cards, you can transfer an existing debt onto a new card, preferably one that has a lower interest. This transfer incurs a small fee, nothing hefty as compared to what the interest rate on that card could be charging. This is how you can get rid of the outstanding balance on a credit card with a higher APR by transferring it to one with a lower rate, thus incurring lower interest charges.
8. Can I Apply for a Credit Card If I Have a Bad Credit Score?
Yes, definitely. A few credit card issuers have introduced credit cards for people with bad credit scores. You can look up the best credit cards for score that ranges from 300 to 600 and beyond. Refer to the best ten credit cards mentioned above and choose one that suits you in terms of features and benefits.
9. How Many Credit Cards Are Sufficient?
This is highly dependent on the amount of credit you need and can pay off. By getting yourself a lot of credit cards, you could end up indulging in over-spending, which could lead to outstanding balance and interest payments. Thus, based on how much credit you require and can effectively pay off with your salary each month, go for whatever number best suits you and your pocket.
Try to choose from lower APR credit cards if you decide to keep a few in your wallet. The lower APR credit cards may be used later for transferring debt if need be.
If you have more credit cards and a few of these remain inactive, it is recommended that you close all such accounts to safeguard yourself from identity theft and other fraudulent activities that are on the rise lately.
10. What Is the Difference Between a Secured and Unsecured Credit Card?
A secured credit card means that your card is backed by a cash deposit that is to be paid before you can start using the credit limit allowed by your card. This limit is most likely to be the amount of cash you have initially deposited into the account.
On the other hand, an unsecured credit card is one that comes with no collateral to back it up. The credit limit for such cards is dependent on how the lender evaluated your creditworthiness based on your credit score. They would usually look through your credit report, payment history, and FICO score and then decide a suitable credit limit for you.
Secured credit cards are most suitable when you don’t have sufficient credit history for the lender to assess your eligibility for the credit card. Otherwise, with a low FICO score, unsecured credit cards could present some harsh interest rates and other related fees and charges.
If you are still worried about whether or not you should apply for a credit card with a credit score of 550, think no more! It’s time to act. We have laid out why and how a credit card can aid you with enhancing your credit score, even with a history of bankruptcies. Choose a credit card, secured or unsecured, from the top 10 listed here and get on with your journey to improvement.
Keep the essential tips in mind while using your credit card(s) and don’t hold back on your desires. Just keep a track of your spending and make timely payments. you are sorted!