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Credit Builder Cards - Top 10 and Everything You Need To Know

Even if it is difficult to get a credit card when you have no credit or poor credit, it is still possible to get approved for some types of credit cards. If you are searching for a credit card and you have bad credit, it is recommended that you do your research and find the most competitive products and cards that will not harm your credit rating further. After getting the appropriate card, you can use it to rebuild your credit profile. Let’s look at some of these credit builder credit cards and ways on how you can improve your credit score.

What Is A Credit Builder Card?

A credit builder credit card is a card ideal for those with damaged credit scores and those with little credit history. As the name suggests, this card offers the opportunity to an individual wishing to enhance his/her credit rating. Generally, when you first apply for this card, you will be offered a limited amount of credit, but if you make consistent and timely payments, your card provider can raise your limit.

How Do Credit Builders Work?

These cards charge high-interest rates, but some providers lower the APR once a customer proves that he/she can manage the card. Lenders charge high-interest rates to reduce the risk of losing their money in case the borrower fails to pay the loan. A high APR shows that the borrower has to pay substantial interest in his/her outstanding balances. Hence, it is crucial to pay off the card in full every month.

Some credit card companies will let you earn a little amount of cash-back. Others will give you a 0% period in balance transfers or on purchases. Depending on your needs, some cards may be ideal for spending when you travel abroad. Below are the main categories of credit card builders that you can choose from.

The Two Main Types of Credit Builder Credit Cards

Although having a poor credit history limits the number of credit cards that you are eligible for, you can still qualify for subprime or secured credit cards. These cards are ideal for those with no credit or those with poor credit.

Secured Credit Cards

The secured credit card works just like other credit cards, but you will be required to submit a refundable security deposit before opening the account. After your account is approved, you will get to use it as an unsecured credit card, but if you default, your provider will hold the security deposit to cover your debt.

For this card, you will be required to make a minimum monthly payment that will be based on your spending. Commit yourself to make on-time payments to improve your credit score. Besides, your card issuer can decide to upgrade the card to a non-secured credit card, return your deposit or even raise your credit limit.

Subprime Credit Cards

This is an unsecured card that is meant for individuals with bad credit. For a subprime credit card, you do not need to submit a security deposit, but your card issuer will impose significant credit card fees to cover the risk involved in lending to a person with bad credit.

Most lenders in the U.K. will require you to make a one-time fee when opening the account. You will also be required to pay annual or monthly fees, depending on your lender’s requirements.

The card may also have transaction fees and high cash advance fees. The interest rates will be high, and they will offer a small line of credit. It would be best if you also kept in mind that most of these cards do not provide travel insurance or purchase protection policies like other cards.

What Is The Best Credit Builder Card?

We have searched high and low to provide you with a list of the best credit builder cards.

  1. Capitalone - 34.9% APR
  2. Aquacard - 35.9% APR
  3. Aquiscard- 29.8% APR
  4. Barclaycard forward - 34.9% APR
  5. Amazon Classic- 29.9.% APR
  6. Chrome Card - 24.7% APR
  7. Fluid Card - 29.9% APR
  8. Ocean - 34.9% APR 
  9. Think Money - 39.9% APR
  10. Marbles - 29.7% APR

What You Should Consider When Choosing A Credit Builder Card

  • Eligibility. One way of avoiding a hard credit check is by using an eligibility checker to see various credit cards and their eligibility requirements. By doing so, you will be able to consider the available options before submitting any applications.
  • Don’t apply for multiple cards at once. If you do not know your credit rating, you should avoid applying for several credit cards in a short period. Whenever a person applies for credit, the lender performs a “hard check” on your credit file, and too many “hard checks” may ruin your credit score.
  • Interest rates. The rates offered by lenders on credit cards for bad credit are not competitive, but rates will vary among providers. Therefore, it is essential to check the interest rates provided by different lenders before making your final decision.
  • Rewards. Different cards will offer different benefits. For instance, some may offer 24-hour customer service, in-app banking, or access to your credit score. When choosing a credit builder card, select the one that suits you best.

How To Find The Best Credit Builder Cards

Various lenders offer credit building credit cards. However, you should always find out what the card offers. When looking for a credit builder card, always consider:

  1. Flexible monthly payments. Does the lender offer flexible monthly payments? These are the essential aspects of credit builder cards. Find a card that allows you to manage your monthly payments appropriately so that you continue improving your credit score.
  2. The minimum and maximum credit limit. These cards usually have strict credit limits to make sure you can control your finances. Even so, search for a card and the amount that you can manage.

While choosing a credit card will depend on your goals, watch out for those with hidden fees. These fees could be described vaguely, for instance, the “telephone fees” or “copy fees,” and they can add up fast. You should also stay away from cards with high-interest rates. This is because the rates could even overtake the principal if they are too high. Lastly, rewards should not be the main factor to look out for when selecting a credit builder card. Instead, focus on those cards which have fewer fees.

How To Improve And Build Your Credit Rating

After qualifying for your credit builder card, you should commit yourself to make on-time payments, avoid late payments to avoid additional fees and try to make the minimum repayments since missing a single payment can adversely affect your future credit card applications.