Low credit line credit cards are tailored for people with bad credit.
Many of these cards are extremely limited in how you can use them, and they often come along with annual fees. However, they’re also more flexible when it comes to the credit score you need in order to qualify.
Low credit line credit cards are an excellent tool you can use to rebuild your credit after you’ve filed for bankruptcy, or otherwise suffered a significant hit on your credit score.
Why Low Credit Line Credit Cards Help
There are a lot of differnet ways to improve a low credit score. Signing up for a low credit line credit card is only one way.
The reason using such a credit card helps is because the following actions boost your credit score over time.
- Paying all bills on time: By paying off your credit card balance in full, it develops a documented history of good payment habits.
- Credit utilization ratio: Credit utilization is your total credit card balance divided by your credit limit. The higher the limit and the lower the balance, the better the ratio. Keeping any card, even a low limit one, paid off, will help your credit score.
- Avoid credit applications: Applying for one low credit line credit card will show up as a hard inquiry against your credit score, but if you avoid any other credit applications for as long as possible, the benefits of boosting your credit limit should overcome that one application.
Monitor Your Credit Score
According to the FTC, federal law allows you to request your credit report from each of the three credit reporting companies.
You can order them all in one place at AnnualCreditReport.com.
If you do this every 12 months, it’ll allow you to log your progress at increasing your credit score. If you keep using your low credit line credit card and paying it in full every month, you should start seeing your score increase.
As your score increases, the credit card company will increase the credit limit on your card, further improving your credit score.
It’s a gradual cycle that eventually results in an excellent credit score, and the ability to apply for other higher rate, lower interest rate credit cards. Or you’ll be able to apply for car loans, store credit cards, or even a mortgage, at competitive interest rates.
Other ways to improve your credit score:
- Avoid any late payments: Pay all of your utilities, rent, mortgage and other bills on time. Late payments will stay on your credit report for seven years. So pay all of your bills on time no matter what.
- Collection agencies: Paying off a collection agent that has posted negative information to your report won’t remove that information. It stays on the report for up to seven years. Invest your money on maintaining a solid payment history on your existing bills that haven’t gone to a collection agency.
Signing up for a low limit credit card can become just one action you can take in a plan made up of many moves that’ll eventually provide you with a stellar credit score that’ll open up many financial doors for you.
Best Low Credit Line Credit Cards
Browse through the following low rate credit cards and choose the one that has the best options for your situation. All of these cards were selected for having a high approval rating by former and existing customers.
Remember, only apply to one of these cards, use it for all of your normal purchases like groceries and auto fuel, and pay it off in full every month.
What’s surprising about Capital One’s secured Mastercard is the fact that there’s no annual fee. However you will need to make an initial deposit of $49, $99, or $200 to secure the card and qualify.
The lower your credit score, the more you’ll have to pay. However once you receive the card, you’ll have a reported credit limit on it that gets reported to the credit bureaus. If you pay the card in full every month, it’ll boost your score.
Capital One Secured Mastercard Features:
- No annual fee
- Reports to all 3 credit bureaus
- Initial credit line of $200
- Higher credit line after 5 on-time monthly payments
- 24/7 online, phone, or mobile app account access
You might not have heard of Avant Card before, but it’s one of the most highly rated credit cards for building up your credit score.
Best of all, you can check if you qualify for the card without a hard inquiry against your credit report. If you do qualify, all of the following features are available if you sign up.
- Avant continuously reviews your account for good financial behavior and will increase your credit line automatically
- No annual fees
- Online banking portal
- Higher variable interest rate than other available cards (will not matter if you pay in full every month)
- Reputable company, in business for over 20 years
OpenSky is one of the most amazing low credit line credit cards for many reasons. The most important is that when you apply it will not issue a hard inquiry against your credit report.
Instead, you deposit as much money as you’d like your credit card limit to be set at. So, if you deposit $200, the credit limit on the card is $200.
Every single month, OpenSky reports your positive on-time payment history to all three credit reporting bureaus. These overwhelming recent positive marks on your report quickly boost your credit score. It’s like a pre-paid credit card that also improves your credit score.
Features of the OpenSky Secured Credit Card:
- No application fee, processing fee or servicing fee
- Use it wherever Visa credit cards are accepted
- Get email alerts so you never forget to make a payment
Merrick Bank is a credit card for people with somewhat poor credit. You can pre-qualify without a hard-inquiry against your credit report. The application only takes about 60 seconds.
Once you qualify, you’ll receive a Visa card with a low credit limit. But the promise that comes with this account is that if you make your minimum payment by the due date for at least 7 months, your credit limit will be doubled automatically.
Other features that come with this credit card include:
- A free credit score report every month directly from the credit bureaus
- Account access from the web and via a mobile app
- No penalty interest rates or over limit fees
The only drawback is that people with no or very poor credit may not qualify, but for anyone with bad credit but well on their way toward improving it – Merrick Visa is a great next step.
If you’re a current or former military member, then a USAA Visa card is a clear choice if you need to repair your credit score.
With a deposit to a secured USAA card, you can have a credit limit from $250 up to $5000 (depending what you deposit). Best of all your deposite purchases an interest-bearing CD, so your deposite will earn decent interest.
Features of a USAA Secured Visa Card:
- Deposit earns interest in a CD product
- Use outside the U.S. and there are no foreign transaction fees
- Lowest interest rates among low credit limit credit cards
- Balance transfer rates available up to 3%
- Unfortunately, it carries an annual fee of $35
Building Your Credit With Low Limit Credit Cards
While it won’t cure a bad credit score overnight, signing up for a low credit line credit card is a very smart first step.
You’ll notice your credit score will rise much more rapidly when you’re using one of these cards and paying off the balance every month.
Before you know it, you’ll have a stellar credit score in no time, and some of the most premium credit cards and banks coming after you to get your business.