We've had a lot to say about bad credit credit cards over the years, but with a new year comes new cards, new issuers and new options.
It's no secret that the market for poor credit cards grew exponentially post-Great Recession; that's Capitalism. With greater demand comes greater supply, and of course greater competition. The good news for consumers in the market for such a card is that there are some solid secured and unsecured options available in 2013. And if your New Year's Resolution is to improve your poor credit score, applying for, receiving and using a new credit card responsibly is a priority.
Why? Because your credit score is significantly affected - for better or worse - by new credit accounts, credit utilization and most importantly payment history. A new credit card gives you another opportunity to prove to lenders that you've made responsible credit use a priority in the upcoming year.
With that, here are our picks for the best credit cards for bad credit in 2013, as well as a couple of duds to steer clear from...
The Best Unsecured Credit Card for Bad Credit
- Continental Finance Matrix Discover Credit Card
Few bad credit credit cards have taken as much abuse online as the Matrix Discover Credit Card. But we're here to tell you that a lot of that criticism is misinterpreted.
If you have a below-average credit score, you're not going to be approved for the very best cards available. That's just how credit works. In order to get a great credit card, you need to have a great-to-good score. To achieve a great score, you need to first establish a strong credit profile by showing lenders that you're a responsible and active credit card user; if you would prefer not to front a security deposit, than there are only a handful of unsecured bad credit cards on the market to choose from.
Which brings us back to the Matrix Card from Discover. This credit card is a legitimate credit-builder that requires no up-front fee. It's got an easy online application, and you'll get a quick response regarding your approval. The APR is higher than the aforementioned Capital One Secured Mastercard, but if you pay your balance back in full each month - and this is imperative if you're using this card to build credit - then you'll never have to worry about paying the nearly-30% APR.
In our opinion, the only legitimate knock on this card are the monthly fees: $12 each month, though they're waived your first year as a cardholder. But sometimes, you gotta' pay money to make money, and you'll save a small fortune on interest fees down the line when you establish a good credit profile using this unsecured card.
The Best Prepaid Card for Bad Credit
We've said it before, but it's worth saying again: Prepaid cards will not directly improve your credit score. Sure, they can work to improve spending habits which could eventually lead to good credit practices down the line, but use of a prepaid card does not improve your credit in any direct way.
That being said, Serve from AmEx is a brilliant personal finance tool in 2013 that's worth checking out if you're simply looking to put some plastic in your wallet.
Unlike other prepaid cards and accounts, there are very few fees attached to Serve - no monthly fees, no setup fees, and you can link your card to a bank account or credit card. (Some money-loading fees may apply - check out our full Serve from American Express review for details.)
But it's the way in which members can transfer money - and the social networking tools it encompasses - that sets this prepaid card apart from competitors in the new year; transfer your money through email, text message or Facebook, put up items for sale on your Serve account, and even raise money for various causes via Serve.
The possibilities are almost endless when it comes to the Serve from American Express prepaid service, and while it won't improve your credit, people with bad credit hoping to add a prepaid card to their wallet should absolutely take note.
And finally, here's one bad credit dud to stay away from in 2013...
The Worst Credit Card for Bad Credit
- First Premier Bank Credit Card
If the 36% ongoing APR wasn't bad enough, First Premier even has the gall to charge a $1 minimum interest charge. Huh?
Sign up for this credit card and you'll be hit with a one-time processing fee running you a cool $95, and there's a first-year annual fee of $75. In year two, they lower the annual fee to $45, but then add on a monthly fee (waived your first year) of $6.25 - that's $75 annually. So essentially this credit card costs $120 annually just to keep in your wallet, and there are no rewards, no intro periods to take advantage of. This is a bad credit card to stay away from in 2013.
Disclaimer: This content is not provided or commissioned by the company whose products are featured on this site. Any opinions, analyses, reviews or evaluations provided here are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by the Advertiser. This site may be compensated through the Advertiser's affiliate programs.
Credit One Bank® Unsecured Visa® for Rebuilding Credit
The best unsecured credit card available today is this option from Credit One. This card is targeted at consumers with bad or no credit, and is a worthwhile card to consider for building credit since it reports to all 3 major credit bureaus. Click the "Apply" button to the left for terms and conditions, fees and more info on how this card can help you get the ball rolling on building credit.
First Progress Platinum Prestige Secured MasterCard®
For consumes more interested in lower ongoing APR's and annual fees, this is the secured credit card Creditnet recommends most. There's a fully refundable security deposit required to open this card, however approval rates are high and this First Progress card for bad credit reports to the major credit bureaus.
