New banking technologies have created a highly competitive industry; with most institutions, dangling mouth-watering offers to prospective customers. For instance, customers today are able to get a free online checking account with no opening deposit offers from financing institutions. Even so, those financing institutions continue tightening their grip on issues relating to irresponsible credit usage and poor banking histories.
If you are facing issues getting a credit card due to poor scores in your history, a second chance credit card with no security deposit can give you a fresh start to take charge of your finances. Many things can come to ding your credit score.
Ultimately, you want the score to be where it should be. It does not matter that you missed some payments or had to declare bankruptcy in the face of hard financial times. You can use some of these second chance retail credit cards and still take another shot at responsible credit usage. By consistently making on-time payments, your credit score could tremendously improve.
While most people think that you must settle for a secured credit card, second chance credit cards provide numerous options, including no collateral offers. When working towards fixing past credit problems, you will want to know the difference between secured and unsecured credit cards.
If you have bad credit, you may think there is no big difference between secured and unsecured credit cards. The main difference, however, between regular and second-chance credit cards is that the latter are credit cards to rebuild credit. You can check our review on bad credit cards guaranteed approval no deposit for more insights on the topic.
However, if you are looking at poor credit scores between 300 and 619, you need another chance to rebuild those scores. Since lenders already understand that consumers looking for these cards often have damaged credit histories, they are more lenient with their requirements. Also, you can open a free business checking account online with no deposit to make your monthly card payments easier to manage.
Best Second chance Credit Cards with No Security Deposit
Repairing your credit is a tough business, particularly after a negative event like bankruptcy. A scenario where you first need credit to build your credit is a catch 22 for most consumers. Nonetheless, you still have options. Below are some of the best second chance retail credit cards, where you do not have to make a security deposit.
These credit card issuers have quick and easy application procedures that don’t impact applicants’ credit scores. If you commit to timely monthly payments, all these issuers report your credit account to major credit bureaus. This is quite essential for improving credit scores with those bureaus.
1. Capital One QuicksilverOne
This is not primarily one of those credit cards to rebuild credit. However, if you have credit problems before, you might qualify for the Capital One QuicksilverOne Cash Rewards Credit Card and build your credit history without collateral. The card is, however, most ideal for customers with average or fair credit.
- Earn unlimited cashback of 1.5% on all purchases
- 0% introductory APR on procurements for new cardholders
- 0% introductory APR on balance transfers for the initial 9 months
- No balance transfer fee
- No foreign transaction fee
- Standard variable 23.24% APR applies after introductory APR offer
- Annual fee of $39
2. Total Visa Card
The Total Visa Card is optimized for people with less-than-stellar credit or fair/bad credit consumers. Here is why you should consider this card:
- The application process is fast and easy
- Get almost instant response
- Genuine Visa Card with wide nationwide acceptance as well as by online merchants
- Manageable monthly charges
- Once approved, just pay the program fee to open an account and get available credit
- Monthly reports to all the three major bureaus
- Checking account required
- No introductory purchase APR offer
3. Credit One Bank Unsecured Platinum Visa
This Credit One Bank Unsecured Platinum Visa® credit card is most suitable for building a credit history without depositing collateral. The card awards a 1% rebate on gas groceries and gas. The regular APR varies from 20.46% to 26.24%.
- Easy, fast, and secure prequalification
- Receive a 1% rebate on all qualifying purchases
- Rebates automatically post to your account every month
- Fair APR ranging from 15.65% to 24.15%
- A creditworthiness-based annual fee ranging from $0 to $99
- No introductory purchase APR offer
4. Milestone Mastercard
If you are running out of options for building credit using credit cards without a security deposit, consider the Milestone Mastercard Bad Credit Considered. The card comes with a fixed 23.9% APR, and a prequalification first option for customers to see if they qualify for the card.
- A credit-based annual fee ranging from $35 to $99
- Prequalify without impacting the credit score
- Bad credit required
- Less- than-perfect credit considered
- Access mobile account at any time
- Fraud-protection if you lose your card
- Reports account history to three major US credit bureaus
- No intro purchase APR offer
5. First Premier Credit Card
This is an easy credit card to obtain even if you have very bad credit. The First Premier Credit Cards comes as a perfect tool to rebuild your credit after going through a devastating financial difficulty.
- Fast application process
- Considers all credit types
- Involves a processing fee to receive the card
- High APR rates
What Second Chance Credit Cards Can One Pick?
By having poor credit, you won’t qualify for mainstream credit cards. But you are not out of luck. You can pick between two categories of second-chance credit cards:
- Secured credit cards
- Unsecured credit cards
It is vital to understand the difference between the two kinds of second-chance cards to help you make informed choices once you begin looking for one. Doing that is especially essential when you want to open a free business checking account online with no deposit. Other banking service providers require you to sign up for their secured credit card before qualifying for the free business checking online account.
Secured credit cards
Secure credit cards often require applicants to make an upfront deposit before opening an account. The deposit averagely costs $250. With a history of irresponsible credit usage, some providers will want collateral for the card, just in case you fail to pay any balances.
Although it is highly unsuitable to lock away hundreds of dollars, doing so can improve your odds of getting a credit card from that provider. Besides, different card issuers offer different features, including secured credit cards.
For example, some secured cards often allow customers’ security deposits to earn interest while it is in holding. This way, you can build your security deposit a bit. By the time you get it back, it will be a little more than the amount you deposited in the beginning.
With some card issuers, you can always add funds to increase your security deposit. In turn, this is going to improve your line of credit on that card. Also depending on who your issuer is, you may as well qualify for higher credit limits without adding cash to the initial security deposit. As you keep making payments, over time, your credit score will increase.
Unsecured credit cards for bad credit
In the place of secured credit cards, there are unsecured credit cards as well. These cards are marketed for customers with bad credit in the market. The best part is your provider will not be asking for collateral. On the downside, second chance retail credit cards with no security deposit are rare to come by and they tend to charge high fees.
It is very important to locate a card that allows consumers to prequalify without a ding on their credit score. Some providers such as Charles Schwab often make hard credit searches that can affect your score. You’ll want to avoid such credit card providers from the start.
That way, you will know in advance whether you stand to be approved. For example, the Credit One Bank Unsecured Platinum Visa is open to clients with less-than-stellar credit. Plus you can prequalify for the card with no effect on your credit score.
Can You Carry A Balance On Your Card?
Whether you pick a secured or unsecured credit card, it is best to consider clearing off all balances each month. Second-chance retail cards are optimized for persons with poor credit. They usually come with high-interest rates. By avoiding balances on your credit card, you become debt-free and stay focused on the actual goal: using second chance credit cards to rebuild credit scores.
What To Do Once You Get Your Card?
The moment you obtain your card, your second chance to rebuild credit scores begins in earnest. This is the time to watch due payments with a hawk-eye. The rule of thumb in taking another shot at rebuilding credit history is committing to timely payments. This is the only way you can increase those wanting scores on your credit record. To help you manage your payments more easily, you can consider:
- Marking your calendar
- Setting phone reminders
- Setting up auto-pay with your checking account
Along the way, start working on improving your financial habits. For instance, overspending is the number one reason contributing to those with poor credit scores. Your second-chance retail credit card is likely coming with low credit limits. This is going to help practice how to control your spending. Additionally, you might also pick up some good habits like paying off your card balance before you spend more.
In the long run, being successful with your second shot at credit cards boils down to paying off balances on time plus keeping your spending in check. It is very important to ensure your credit card provider reports your account activity to relevant credit bureaus.
With a rebuilt credit score, some of the card issuers can transition you into their unsecured card category. In any event, so long as you adhere to the set terms of credit, you can get full reimbursement of your security deposit once your credit scores improve and decide to close the card account.
How To Rebuild Credit Using Credit Cards?
One of the major reasons to use a credit card to rebuild credit is that it provides the chance to start a positive credit history as you manage the account responsibly. If you have been facing credit issues in the past, you will discover that it’s quite difficult getting approval for other popular types of credit.
This is why most consumers with less-than-stellar credit start the process of rebuilding credit through secured credit cards, or by using a second chance credit card with no security deposit.
How To Get a Second Chance Retail Card with No Security Deposit?
Those who prefer a second chance without a security deposit will find their options a little limited as with the available long list of secured credit card issuers. Nonetheless, it is not a hopeless endeavor. There are credit cards you can use for credit repair without collateral. Choosing one of the options allowing you to prequalify first is a great way to determine whether you might qualify for an unsecured second chance credit card.
The preponderance of prequalification options in the marketplace will inform you of the cards you qualify for without conducting hard inquiries to your credit report. Yet again, if you do not qualify during the prequalification process, the card provider will often offer options, to which you qualify and can consider before making your application.
Factors to Put In Mind Before Choosing a Credit Card
When choosing any credit card, it is important to put some factors into perspective. Because second-chance credit retailers target people with bad credit, the cards can end up being too costly if you do not manage them well. Some of the crucial elements to consider beforehand include:
- Annual fee: Annual fees can cost as high as $100 per year, just to have the card. It is important to remember that this is not a refundable fee, whether you are getting an unsecured or secured credit card.
- High APR: Unlike regular credit cards, interest rates for these kinds of cards are usually higher. To help you save money on interest as your rebuild credit, be sure to make full monthly balance payments. High APR cards will cost you more if you keep to the habit of carrying balances from month to month.
- Additional fees: Credit cards for bad credit sometimes come with extra fees. Always find out the costs of your card before you sign up.
- Reporting credit: Most importantly, you will want to make certain that your card account gets reported to the credit bureaus. If not, it will not do much towards rebuilding and repairing your credit. This is the main difference between secured, prepaid, and debit cards.
The Bottom Line
Most times, a second chance credit card with no security deposit will carry higher APRs and fees. This is because they are meant for people with poor credit ratings. Unsecured credit cards are, however, among the few choices you have until you get to improve your credit ratings. It is, therefore, a good habit to take that chance to rebuild your credit history by keeping to timely monthly balance payments and keep away from overspending.