$500 Credit Card For Bad Credit: Best Choices & What to Consider
A credit card is an excellent tool for people who sometimes need to borrow cash before payday without applying for a loan or dealing with lenders. However, most issuers only want to work with reliable borrowers with good FICO scores. But what about those who want the best credit card for bad scores? They need to read our article!
We’ve found some of the best options for unsecured and secured credit cards with $500+ limits and have detailed each below. Here you can find options suitable for everyday shopping and rewards, as well as for building a credit history. Read each description carefully and choose the best option for you.
Credit Cards With $500 Limit: Best Choices
You no longer have to spend hours trying to find among the hundreds of credit cards that fit your FICO score and have an adequate limit because we did it for you. Instead, pay attention to each offer’s interest rate and features, and choose the one that works best for you.
Reflex® Platinum Mastercard®
Do you have a bad FICO score or no credit history at all? Then the Reflex Card from Celtic Bank might be the best option for you!
Because this card is designed for low-rated users, its APR is 29.99% (Variable). It also has a high annual fee for account maintenance of $75 – $125, to which a $10 monthly account maintenance fee is also added from the second year of use. These are the main disadvantages of this option you should consider when choosing.
To get a Reflex Card, you must fill out an online prequalification form and wait for the bank to respond. If you meet all the criteria, you will receive an answer in a few minutes, and you can fill out the rest of the information required to obtain the card, which is the advantage of this option.
Other terms and conditions of this offer include 3% foreign transaction fees and late penalties. It is also important to note that the bank reports borrower payments monthly to the three bureaus, so this option is suitable for building a credit history.
Based on everything written above, we can conclude that this offer best suits users with bad FICO scores who want an unsecured card.
First Progress Platinum Prestige Mastercard® Secured Credit Card
Unlike the previous offer, this is a secured card. To use it, you must make a refundable security deposit, which will later become your limit. This option costs less and has an annual fee for account maintenance of $49. The primary purpose of this credit card is to help you build your credit history so the bank reports all your monthly payments to all three bureaus.
What do you need to know about this offer?
- First Progress Platinum Prestige has a low APR of 14.24%, which is the main advantage of this offer.
- This card has a foreign transaction fee of 3%.
- To use the credit limit, you need to make a minimum deposit of $200.
- You can instantly get First Progress Platinum Prestige if it’s your first such card from the company, you’re over 18, and you have a valid Social Security number.
Another advantage of this option is the availability of cash advances, allowing you to get tens of dollars before your paycheck without turning to lenders. It’s also important to note that First Progress Platinum Prestige is available to everyone, even without a credit history.
This card is excellent for those who have no credit history. After only six months of use, you can apply for an unsecured First Digital Mastercard, so be sure to look into this offer further.
Capital One Platinum Secured Credit Card
This offer from Capital One is worthy of your attention. A secured card with a minimum deposit of $49 has a $0 annual fee and allows you to increase your FICO score fast and cheaply. The great thing about this option is that you can get a $200 spending limit for less than a $100 deposit if you already have some credit history!
Because this offer is designed for those who want to improve their scores, Capital One reports monthly to all three bureaus. So if you make your monthly payments on time and don’t use more than 30% of your limit, you can quickly improve your FICO score and soon transition to unsecured credit cards.
Unfortunately, this card is unsuitable for those with bankruptcy or a past-due Capital One credit card. Also, to qualify, you must earn at least $425 more than you pay monthly for housing.
The remaining conditions for using this offer include the following:
- The foreign transaction fee is $0.
- Its regular APR is 28.49%, a bit high for a secured card.
- You can use cash advances (their APR will be 29.74%).
- The maximum late fee is $40.
- The application process and approval take several minutes.
If you already have a credit history that you want to improve, this credit card from Capital One will be your best option as it allows you to get a $200 initial limit for only $49.
Petal 2 “Cash Back, No Fees” Visa
This card is popular among borrowers because it gives you cash back and rewards and has no annual, transaction, late or other fees. In addition, to get it, you do not need to make a security deposit or have a credit history, which is also a significant advantage.
- Variable APRs range from 16.74% – 30.74%.
- For purchases in individual categories, users receive a cash back of 2%-10%.
- You can get an additional 1.5% cash back from the second year of credit card use if you make on-time monthly payments. All earned rewards can be redeemed as a statement credit.
- The maximum credit limit is $10,000 and requires no initial deposit.
- You can apply for Petal 2 “Cash Back, No Fees” Visa online and find the answer in just a few minutes.
- WebBank reports to all three credit bureaus, allowing you to build a credit history if you make on-time payments.
Overall, this is one of the best offers on the market for those with bad FICO scores because it has no fees and allows you to earn rewards. The only drawback to this option is that it is not available to those who have recent bankruptcy in their reports.
Aspire® Cash Back Reward Card
This unsecured Aspire Card is one of the few offers for bad credit that does not require a deposit. However, you will need to pay an annual fee for account maintenance of $85 – $175.
One of the key advantages of this option is the ability to earn cash back for purchases at gas stations and grocery stores and pay for utilities. However, at the same time, it has a very high APR of 29.99% and a low limit of up to $1,000. In addition, you’ll have to pay 3% for each transaction made in other countries and up to $40 for each missed monthly payment.
Aspire reports to Equifax every month and allows you to open a new account in just a few minutes, but it’s still one of the most expensive offers. Of course, borrowers with bad credit don’t have many options, but we recommend considering this offer only if all the previous ones don’t work for you.
What Is a $500 Credit Card For Bad Credit?
High-limit credit cards are rarely available to those with bad credit scores because they tend to carry their balance for months. For example, if you have less than 600 FICO points, you are unlikely to find many offers with more than a $200 to $300 limit, and, besides, they will have a high APR of 30%.
This leaves you with two options – to get an unsecured credit card with up to a $1,000 limit and pay a high annual fee for account maintenance, or to apply for a secured one without yearly fees but with a deposit of at least $200. To help you make your choice, let’s discuss the difference between these two options.
What Is a $500 Secured Credit Card For Bad Credit?
Secured credit cards work on a simple principle. To use them, you must make a deposit (usually $200), which becomes your line of credit. Over time, if you always pay your balance in full, your limit can increase even without increasing the deposit.
99% of cases, you will need a $500 deposit to get the exact size limit. However, it is essential to note that this option is available to users with a bad FICO score or no credit history, so it is worth considering. Also, the best secured cards have $0 annual fees, which makes them even more favorable than unsecured ones.
What Is a $500 Unsecured Credit Card For Bad Credit?
Unsecured credit cards can give you the $500 limit you need even without a deposit, but they are rarely available to those with bad FICO scores. Most banks prefer to work with reliable borrowers, so they don’t create such offers, but you can still find some great credit cards on the market, such as those from Mastercard or Visa.
The main disadvantages of this option are the high annual fees for account maintenance and APR, no cash back or rewards. So if you plan to carry a balance for months, it’s not the best variant for you. However, it might be an excellent choice if you don’t want to pay a deposit.
How to Choose a Credit Card For Bad Credit
Whether you need a credit card for everyday purchases or to build your credit history, you must choose the right one. To do this quickly, you can use our plan:
1.Find out your FICO or VantageScore.
You can download a free version of your credit report and find your exact rating to contact the card issuer that works with your borrower category. Besides, you can install a free mobile app like “Budget, Bills & Finance Tracker” to track your credit score.
2.Determine which credit card you need.
As we said above, they come in secured and unsecured. Therefore, if you want to build a credit history, it is better to choose the first option, and if you need the card for everyday purchases, select the second one.
3.Compare several offers.
Sometimes, a credit card with a higher annual fee and low APR would be better than one with no fees. Consider all your options, not only those that seem profitable at a glance, and offer cash back or other rewards.
4.Make a plan of action.
You must practice good financial habits to improve your FICO score, so you must schedule all your spending with that credit card account and always pay off its balance on time. Remember that even one missed payment can ruin your FICO or VantageScore, so use a planner or mobile app to track your budget and loans.
Who Should Get a Bad Credit Card With a $500 Limit?
A credit card can be an excellent tool for those with a bad FICO score because it allows you to raise it. For example, you should use this tool if your score is below 600 to get the following results:
- Reduce your credit utilization ratio. Using about 30% of your available limit can show lenders that you are managing your finances wisely and increase your score.
- Create a positive credit history through on-time monthly payments. Even if your monthly balance is only $50 and you pay it off on time, you’re still improving your FICO score because your payment history is 35% of it.
Also, such a credit card is needed for those with no credit history, as many banks refuse to work with this category of borrowers. The earlier you open such an account, the better because it will be easier for you to get a personal or another loan from financial institutions, which often ask that their clients have at least two years of credit history.
How To Use Credit Cards to Build Credit
You should use your credit card account responsibly and pay off your balance on time to create positive financial habits and improve your FICO score. So, it would be better for you to stick to the following rules described below.
Know Exactly How Much You Can Pay
Before opening a new bank account, you should calculate how much cash you can spend each month to improve your credit score and be able to pay the balance off on time. Usually, financial experts recommend setting a limit of 30 percent of your available limit so that you keep the credit utilization ratio as low as possible.
It is also important to remember that such offers often require you to pay interest and various fees, such as account maintenance fees. Therefore, you should calculate whether you can make all necessary payments on time to have a positive credit history.
Practice Good Credit Habits
A credit card with a small limit is an excellent simulator for your financial habits. For example, it’s much easier to learn how to manage an account with $500 only and then move on to more significant amounts.
So, you should avoid spending the entire available limit, as it is terrible for your credit utilization ratio. In addition, you should practice the essential habit in the life of any borrower – the ability to pay off the balance on time and plan your expenses. For example, you can use a special mobile app for this designed by financial experts or use rewards systems to create a positive association with this habit.
Start by fostering good financial habits if you’re just starting to build your credit history. This will help you stay out of debt and experience less financial stress.
Get a Co-Signer
Having a co-signer will not affect your credit history; on the contrary, it will help you to build it faster and more efficiently.
Keep Accounts Open
Over time, you’ll become ready for new credit cards with higher limits and very different terms, but that doesn’t mean you should close all your old accounts. So, financial experts recommend keeping accounts open as long as possible but not using them permanently to reduce your credit utilization ratio. Remember, this parameter is responsible for a third of your FICO score.
There is one exception to this rule, however, and that is credit cards with high annual fees. If it is expensive to maintain the account, close it, but try to open a new one with a $0 yearly fee before doing so.
Pros and Cons of Bad Credit Card With a $500 Limit
You may want to take advantage of an offer like this because of the following benefits:
- It’s easy enough to open a credit card account like this, even if you don’t have a FICO score.
- You can build a credit history from scratch or improve it if you take advantage of an offer like this.
- Such credit cards can help in emergencies when you need to borrow a few hundred dollars before payday.
At the same time, however, it is essential to remember that bad credit cards often have low limits, which can also depend on your initial deposit amount. They also have high APRs, fees, and penalties, making them very expensive.
- What does a $500 credit card limit mean?
- How much of a $500 credit limit should I use?
- What alternatives to $500 credit cards for bad credit?