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Bad credit happens to good people all the time. If you’re among the millions of Americans who have less-than-great credit, it’s easy to feel like credit cards are forever off limits to you. Fortunately, that’s not the case at all. These days, more bad credit credit cards are available than ever. Many are designed to help you rebuild your credit too. By understanding your options for credit cards for bad credit, you can more easily find a card that works for you.

Bad Credit? No Problem

According to a report by the New York Federal Reserve Board, credit card usage among people with subprime credit scores, which are scores of 620 or below, has increased significantly in recent years. The number of people who have credit scores below 620 and who use credit cards increased to 50 percent in 2015 from a low of 45.6 percent in 2013. Increased demand has prompted a surge in the availability of bad credit credit cards, so there are more options than ever.

Considerations to Make When Looking for Credit Cards for Bad Credit

nocashnocreditKeep these points in mind to ensure that you find a card that gives you the benefits that you need:

  • Secured versus Prepaid – A good card for bad credit helps you rebuild your credit. Due to your low credit score, you most likely won’t qualify for an unsecured card. With a secured card, you must put down a deposit, but the card then works like a regular one. With a prepaid card, you load money on it and then spend it, so it doesn’t help you reestablish your credit. Stick with secured cards.
  • Credit Reporting – Just because a card is secured doesn’t mean card activities are automatically reported to the credit bureaus. Read the fine print to ensure that your activity will be reported, or your credit situation won’t improve. Ideally, the credit card company should report to all three bureaus.
  • Fees – All bad credit credit cards charge various fees. There’s no getting around some of them, including late fees. Thanks to the Consumer Financial Protection Bureau, the first late fee can’t exceed $27, and subsequent ones can’t exceed $38. Beware of being nickel-and-dimed for unreasonable fees like maintenance fees, processing fees and fees for additional authorized users.
  • Extras – While you’re unlikely to find a credit card for bad credit that includes cash back rewards and the like, many of them include extras that help you rebuild your credit. Look for a card that includes access to free credit scores and credit monitoring services. Some of them offer free financial education programs too.
  • Graduating to an Unsecured Card – Finally, look for a card that can be transitioned into an unsecured card at some point. That way, you won’t have to close the card when you become eligible for unsecured cards. Your credit will benefit enormously from having older, established cards on your file, so look for a card that is automatically reviewed and upgraded from time to time.

Making the Most of Credit Cards for Bad Credit

A credit card for bad credit can help you turn around your financial situation. Here are some tips for acquiring and using one properly:

  • calculate-creditKnow Your Credit Score – Before applying for cards, get your credit score. You are entitled to a free copy of your credit report from all three bureaus per year. If your file contains errors, have them corrected. Your score may go up, which could make you eligible for better cards.
  • Be Selective – Every time that you apply for a credit card–even a secured one–the inquiry is added to your credit report. This can negatively impact your credit, so be selective when applying.
  • Take it Easy – Whatever you do, don’t take your new card on a spending spree. Use it strategically in order to rebuild your credit. Just because it’s secured doesn’t mean that you can’t get in over your head.
  • Use it Wisely – Adopt good habits for using your new credit card for bad credit. For instance, always pay your bill on time. Try to avoid carrying a balance. By paying it in full every month, you are far less likely to end up in trouble, and it will help you improve your credit more quickly.

Although it may not seem like it right now, you don’t have to have bad credit forever. Someday, you could be the proud owner of a regular, unsecured credit card with a low interest rate and other perks. To get there, however, you must rely on a bad credit credit card. By taking your time, doing plenty of research and being selective, you are sure to find a card that will get you on the road to great credit.