Money

Here’s the best credit card if you have bad or no credit

Jake Johnson and Lamorne Morris in the 'Jury Duty' episode of Fox's "New Girl."
FOX | Getty Images
Jake Johnson and Lamorne Morris in the 'Jury Duty' episode of Fox's "New Girl."

If you've earned a high credit score, choosing the best credit card for your lifestyle means wading through dozens of options. But if you have bad credit, or none at all, your pool of options is decidedly smaller.

Financial services site WalletHub worked with a team of experts to crunch the numbers and determine which cards lead the pack in various categories for 2018, including ones catering to those without good credit.

If the issue is simply that your credit history is limited, WalletHub recommends the Capital One Platinum Credit Card. This card has fraud protection and no annual fee. After five months of making monthly payments on time, users get access to a higher credit line.

But if your credit history is spotty, WalletHub's pick is the Discover It Secured Credit Card with no annual fee. This card offers 2 percent cash back at restaurants and gas stations up to $1,000, plus 1 percent cash back on everything else. At the end of the first year, all cash back earned is doubled as well.

The card requires a security deposit of at least $200 to help establish credit. The deposit will be refunded when you transition to an unsecured line of credit, as long as you've managed the card carefully.

Secured cards like this one are a good option for newcomers or those with low credit scores because the deposit typically matches the line of credit, thus taking away the risk for the issuer, Greg McBride, chief financial analyst at Bankrate.com, tells CNBC Make It. They should also help users learn how to handle credit responsibly.

Most of the time, the credit line on these account matches the amount you put down as a security deposit. However, that doesn't mean the card functions like a debit card: Money doesn't deduct automatically from an account when you swipe. You still have to make monthly payments.

It's possible to fall into the red while using a secured card, too. "You can still accumulate debt if you make purchases and fail to pay your bills on time," Credit Karma reports. "The amount you owe can quickly grow beyond the deposit you made, thanks to interest."

But if you pay off your bill in full every month, using a secured card will allow you build credit and eventually transition over to a traditional, unsecured card.

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