A quarter of American adults have credit scores so low that the major banks dub them risky, subprime borrowers. Despite the name-calling, these folks still have options for getting credit and improving their finances. Here are some of the best credit cards for people with bad credit.

Get Frequent Credit Line Increases

The Secured Visa from Merrick Bank offers subprime borrowers the chance to build positive payment histories and boost their credit scores. Anyone with a credit score in the low to mid 500s should consider this secured credit card. The card can be funded with as little as $200 to as much as $3,000 for the collateral deposit. Customers who make timely payments for the first six months receive an unsecured credit line increase. Merrick Bank provides a free mobile app for paying bills, verifying transactions and checking credit lines. The Merrick Bank Secured Visa charges a 17.45 percent annual percentage rate, APR, and a $36 annual fee.

Apply With No Credit Check

Students and adults with no credit or bad credit can qualify for an OpenSky Visa Card without a credit check. This account works like a secured credit card but is reported to the three major credit bureaus as a revolving unsecured card. Credit lines range from $200 to $5,000. After the account is approved, the borrower must make a deposit into Capital Bank equal to the credit line. This card comes with a 17.5 percent APR and a $29 annual fee.

Earn Interest While Rebuilding Credit

Unlike most other secured credit cards, the USAA Secured Credit Card pays interest on the security deposit. The opening deposit of $250 to $5,000 goes into a two-year Certificate of Deposit, CD, earning a variable rate of return. The amount placed into the CD also determines the card’s spending limit. The APR can be as low as 9.9 percent annually. USAA does not charge an application fee, but cardholders must pay a $35 fee each year to keep the credit card active. Cards may be issued under the MasterCard or American Express network. Here’s the catch: To qualify for this credit card, applicants must be eligible for USAA membership. Applicants must be active or retired military personnel, adult children of eligible parents or widows/widowers of USAA members.

Spend With No Security Deposit

The Capital One Classic Platinum Credit Card delivers 24/7 MasterCard benefits without any collateral. This personal credit card comes with a high 22.9 percent variable interest rate, so cardholders should avoid carrying a balance after the zero percent teaser rate runs out. Capital One charges a $39 annual fee to offset the additional risk of opening accounts for people with poor credit. For the best chance of getting approved, applicants should have credit scores between the mid 500s and the mid 600s.

A Note About Secured Credit Cards

Many of these credit cards are secured cards. A secured credit card is not the same as a prepaid card or debit card.

  • First, payment histories get reported to the major credit bureaus. On-time payments help credit scores go up while missed payments take credit scores down.
  • Second, charges do not tap into the security deposit. The deposit stays at the bank until the account is closed or the borrower defaults on the required payments.
  • Finally, a secured card can be used only within a certain network. Some cards, such as the Horizon Gold or the First Platinum Plus, operate as store charge cards and can only be used at a single retailer. Others are accepted at any place displaying the Visa/MasterCard logo.

Overall, secured credit cards and low-interest unsecured cards can be a great way for people with bad credit to improve their financial health. These initial credit offers pave the way for higher credit lines, preferred auto loans and even home loans.