How to Choose the Right Bad Credit Credit Card
Choosing the right credit card when you have bad credit is crucial for rebuilding your financial reputation. Here's what to consider when comparing your options:
1. Acceptance Criteria
Different cards have varying acceptance criteria. Vanquis Chrome accepts very poor credit, while Zopa requires fair to good credit. Check eligibility before applying to avoid unnecessary hard searches on your credit file.
2. APR and Interest Rates
Bad credit cards typically have APRs between 19.9% and 39.9%. While Zopa offers the lowest rates (19.9%-34.9%), they have stricter eligibility. Most credit builder cards charge around 34.9% APR.
3. Credit Limits
Initial credit limits are usually low (£150-£1,200) but can increase with responsible use. Aqua Classic offers £300-£1,200, while Vanquis Chrome starts from just £150. Higher limits give you more flexibility but require better credit scores.
4. Fees and Charges
Most bad credit cards have no annual fees, but watch out for:
- Cash advance fees: typically 3-4% of the amount
- Foreign transaction fees: usually 2.5-3%
- Late payment fees: up to £12
- Overlimit fees: up to £12
How Credit Builder Cards Work
Credit builder cards are specifically designed to help people with poor credit rebuild their credit scores. They work by:
- Reporting your payment history to all three UK credit agencies
- Providing a small credit limit to minimize risk
- Offering regular credit limit reviews (usually every 6 months)
- Charging higher APRs to offset the increased risk
Using Your Credit Card Responsibly
To maximize the credit-building benefits of your card:
- Pay in full: Always pay off your entire balance to avoid interest
- Pay on time: Set up a direct debit to ensure you never miss a payment
- Keep utilization low: Use less than 30% of your credit limit
- Use regularly: Make small purchases to show active account management
- Monitor progress: Check your credit score monthly to track improvements
When to Upgrade
After 6-12 months of responsible use, you may be eligible for:
- Credit limit increases on your existing card
- Upgrade offers from your current provider
- Mainstream credit cards with better rates and rewards
- 0% balance transfer or purchase cards