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Are there cash-back credit cards for people with bad credit? Infographic
Are there cash-back credit cards for people with bad credit?
Cash-back credit cards for people with bad credit are available but often come with higher interest rates and lower cash-back percentages compared to those for good credit holders. These cards typically require an initial deposit or have strict spending limits to mitigate risk for issuers. Choosing a cash-back credit card designed for bad credit can help rebuild credit history while earning rewards on everyday purchases.
Understanding Cash-Back Credit Cards for Bad Credit
Are there cash-back credit cards for people with bad credit? Cash-back credit cards designed for individuals with bad credit offer rewards on purchases while helping rebuild credit scores. These cards usually have higher interest rates but provide a percentage of cash back on everyday spending to encourage responsible usage.
Top Cash-Back Credit Card Options for Poor Credit
Cash-back credit cards designed for people with bad credit provide an opportunity to earn rewards while rebuilding credit history. These cards typically feature lower credit limits and higher interest rates but offer cash-back incentives on everyday purchases.
Top cash-back credit card options for poor credit include secured cards like the Discover it(r) Secured Credit Card, which offers 2% cash back at gas stations and restaurants. Another option is the Petal(r) 2 "Cash Back, No Fees" Visa(r) Credit Card, which provides up to 1.5% cash back and requires no security deposit.
Key Benefits of Cash-Back Cards for Rebuilding Credit
Cash-back credit cards designed for individuals with bad credit provide an opportunity to earn rewards while rebuilding financial trust. These cards often have flexible approval criteria, making them accessible despite a low credit score.
Key benefits include earning a percentage back on everyday purchases, which helps offset expenses. Responsible use of cash-back cards promotes positive payment history, a critical factor in credit score improvement. Over time, consistent payments and rewards accumulation can lead to access to better financial products.
Eligibility Requirements for Cash-Back Cards with Bad Credit
Cash-back credit cards for people with bad credit often have specific eligibility requirements, including a minimum credit score, usually around 580 or lower. Applicants may need to provide proof of steady income and have a limited history of delinquent payments. Some cards require a security deposit, functioning as secured credit cards to help rebuild credit while earning cash-back rewards.
Typical Fees and Interest Rates to Watch Out For
| Fee Type | Description | Typical Range |
|---|---|---|
| Annual Fee | Fee charged yearly for card membership, common in bad credit cash-back cards to offset risk. | $25 to $100+ |
| Cash Advance Fee | Fee for withdrawing cash against the credit card balance, usually high for subprime credit holders. | 3% to 5% of the amount advanced |
| Late Payment Fee | Penalty charged for missing the minimum payment deadline, often higher on bad credit cards. | $25 to $40 |
| Overlimit Fee | Fee applied if spending exceeds the credit limit, some issuers may waive this fee. | $25 to $35 |
| Interest Rate (APR) | Annual Percentage Rate on Purchases and Cash Advances | |
| Purchase APR | Interest rate applied to purchases if balance is not paid in full each month. | 20% to 30% or higher |
| Cash Advance APR | Higher interest rate charged on cash advances, typically no grace period. | 25% to 35% or higher |
| Penalty APR | Increased interest rate triggered by late payments or returned payments. | 30% to 35%+ |
How Cash-Back Rewards Work with Subprime Credit Cards
Cash-back credit cards are available for individuals with bad credit, offering a way to earn rewards on everyday purchases. These cards typically come with higher interest rates and lower reward percentages compared to prime credit cards.
- Reward Earnings - Subprime credit cards usually provide cash-back rewards ranging from 1% to 2% on qualifying purchases.
- Spending Limits - Many cards set a cap on the total cash-back that can be earned within a billing cycle or year.
- Redemption Options - Users can redeem cash-back as statement credits, direct deposits, or gift cards depending on the issuer's policies.
Using cash-back credit cards responsibly helps improve credit scores while earning modest rewards despite a bad credit history.
Comparing Secured vs. Unsecured Cash-Back Credit Cards
Cash-back credit cards designed for individuals with bad credit often come in two main types: secured and unsecured cards. Secured cards require a cash deposit as collateral, which lowers the risk for the issuer and increases the chance of approval.
Unsecured cash-back cards do not require a deposit but usually have higher interest rates and stricter approval criteria. You should compare rewards rates, fees, and credit-building potential when choosing between secured and unsecured cash-back credit cards.
Tips for Maximizing Rewards While Repairing Credit
Cash-back credit cards designed for individuals with bad credit help rebuild credit scores while earning rewards. Selecting the right card and managing it responsibly maximizes benefits during credit repair.
- Choose secured cash-back credit cards - Secured cards require a deposit, reducing risk while enabling cash-back rewards and credit rebuilding.
- Pay balances in full each month - Avoiding interest charges preserves rewards value and improves credit utilization rates.
- Monitor credit reports regularly - Tracking credit status helps identify errors and ensures progress toward better credit scores.
Common Pitfalls to Avoid with Cash-Back Cards and Bad Credit
Cash-back credit cards for people with bad credit exist but often come with high fees and interest rates that can outweigh rewards. Common pitfalls include not fully understanding the card's terms, leading to unexpected charges and damage to your credit score. It is crucial to read all fees and payment requirements carefully to avoid these costly mistakes.
Steps to Improve Credit Using a Cash-Back Credit Card
Cash-back credit cards designed for individuals with bad credit offer a way to earn rewards while rebuilding credit history. Using these cards responsibly can lead to improved credit scores over time.
- Choose a Suitable Cash-Back Card - Select a card specifically tailored for bad credit that offers cash-back rewards without high fees.
- Make Timely Payments - Pay your balance on time each month to demonstrate reliability to credit bureaus.
- Keep Credit Utilization Low - Use only a small portion of your credit limit to maintain a healthy credit utilization ratio.
Related Important Terms
Subprime cash-back cards
Subprime cash-back credit cards offer consumers with bad credit the opportunity to earn rewards while rebuilding their credit profiles, typically featuring lower credit limits and higher interest rates. These cards often provide modest cash-back percentages on everyday purchases such as groceries and gas, helping users maximize savings despite credit challenges.
Secured cash-back credit cards
Secured cash-back credit cards provide a valuable option for individuals with bad credit, offering rewards on everyday purchases while helping rebuild credit history. These cards require a refundable security deposit, which acts as collateral and determines the credit limit, making them accessible for those with poor credit scores.
Alternative data credit approval
Cash-back credit cards for people with bad credit increasingly use alternative data credit approval methods, such as rent payments, utility bills, and phone bills, to assess creditworthiness beyond traditional credit scores. This approach helps expand access to cash-back rewards for individuals with limited or poor credit histories by leveraging a broader range of financial behaviors.
No-credit-history rewards cards
No-credit-history rewards cards offer cash-back benefits to individuals with limited or bad credit, helping build credit while earning rewards. These cards typically feature lower credit limits and higher interest rates but provide essential opportunities for credit improvement and financial growth.
Ultra-low-limit rewards cards
Ultra-low-limit rewards cards designed for individuals with bad credit offer cash-back incentives while maintaining strict spending caps, typically ranging from $200 to $500. These cards help rebuild credit by reporting to major credit bureaus and providing modest rewards on everyday purchases, despite their limited credit lines.
Credit-builder cash rewards
Credit-builder cash rewards credit cards offer a unique opportunity for individuals with bad credit to earn cash back while improving their credit score. These cards typically feature manageable credit limits, responsible usage incentives, and periodic cash-back bonuses that encourage timely payments and credit-building habits.
Soft-pull prequalification cash-back
Soft-pull prequalification cash-back credit cards allow individuals with bad credit to check their eligibility without impacting their credit scores, making it easier to find suitable cash-back options. These cards offer rewards on purchases while helping rebuild credit through responsible usage and timely payments.
Tiered rewards subprime cards
Tiered rewards subprime credit cards offer cash-back incentives tailored for individuals with bad credit, providing higher cash-back percentages on specific spending categories like groceries or gas and lower rewards on general purchases. These cards often include features designed to help rebuild credit while earning rewards, making them a practical choice for cardholders aiming to improve their credit score.
Fintech-backed credit rewards
Fintech-backed cash-back credit cards for people with bad credit offer accessible rewards programs that help rebuild credit while earning instant cash-back on everyday purchases. These cards utilize advanced data analytics and AI to provide personalized cash-back rates and credit-building tools tailored to individuals with low credit scores.
Nontraditional issuer cash-back cards
Nontraditional issuer cash-back credit cards for people with bad credit often include options from providers like Petal and Deserve, which use alternative data such as income and spending habits for approval rather than traditional credit scores. These cards typically offer around 1-1.5% cash back on purchases and come with lower fees and fewer penalties compared to traditional bad credit cards.