Top Credit Cards For Subprime Borrowers

When you’re stuck with a subprime credit history, getting out of the rut can be difficult. You might wind up having to apply for loans or credit cards. As a business owner, both these tools can be crucial to running and improving your company.

Luckily, many credit card issuers have designed specific cards for subprime borrowers. These cards provide the chance to rebuild your credit and get your business back on track — and if you lack a credit history entirely, you’ll be able to develop your credit from scratch.

We’ve broken down our favorite subprime credit cards, both for business and personal use. Get the full picture below!

What Are Subprime Credit Cards?

Subprime is a term used to describe the credit of a consumer who either lacks a credit history or has damaged their credit in some way. Subprime credit cards are aimed at users who have subprime credit histories. (A prime credit status is assigned to those with a good credit history, while superprime is reserved only for people with excellent credit.)

In many—although not all—cases, subprime credit cards are also secured cards. Secured cards require that users place down a deposit before using the card. As a general rule of thumb, the amount deposited will equal the amount of available credit.

Average Interest Rate On Subprime Credit Cards

Because subprime credit cards are targeted towards potentially riskier users, the interest rates (also known as APR) are usually higher than on a standard card. The average APR for a credit card aimed at those with bad credit will often sit around 20% or above. This rate will vary depending on the current prime rate published in the Wall Street Journal.

Penalty APRs for late payments on subprime cards vary, although it’s not uncommon to see rates above 30%. A few cards, however, actually feature no penalty APR, something that could be beneficial for a business stuck in a financial hole.

Depending on the situation, you may be able to qualify for a lower APR, though this might be out of reach if you already have a bad credit history. If you qualify for a better rate, you may want to check out credit cards for those with good credit instead.

Advantages & Disadvantages of Subprime Credit Cards

By signing up for a subprime credit card, you’ll be able to help build up your credit—as long as you follow good credit card practices. Once you build up enough credit, you’ll be able to eventually graduate to better cards. You can also use a subprime card to get in the habit of paying off a monthly balance.

However, there are plenty of negatives to subprime credit cards. To start, many of them offer minimal or no rewards. They also frequently lack bonus offers or zero interest rate periods. This means that you won’t be able to earn money by using your card.

These cards may also include higher-than-average APRs. A high APR can be especially problematic if you need extra time to pay off an expensive balance. As long as you pay your bill on time and in full, however, you won’t need to worry about a high APR.

In many cases, subprime users may only be able to qualify for a secured card. Secured cards can be especially annoying because you’ll need to place down a security deposit before using the card.

It’s worth noting that these negatives exist because subprime users are marked as risky candidates. As such, issuers will attempt to minimize their losses by making penalties higher and/or rewards lower. The good news is that once you’ve successfully improved your credit history with a subprime card, you’ll be considered a less risky user—letting you apply for cards with better rewards and lower rates.

Top Business Credit Cards For Subprime Borrowers

Business-specific cards can be an excellent choice for businesses. These cards often offer features not included in personal cards, including employee cards and reward schemes built around how most businesses spend money. While there aren’t many business cards targeted at subprime borrowers, there are a few that can help improve or build your credit history.

Here are our top subprime credit cards for business borrowers:

Wells Fargo Business Secured Credit Card

Because this is a secured card, you’ll need to place down a deposit in order to use Wells Fargo’s subprime card. Your deposit must be at least $500 and you can place down up to $25,000, a higher cap than most secured cards on this list.

This card features an interesting rewards scheme: you can choose to either earn one point for every $1 spent or get 1.5% cash back. If you select the points option, you’ll get a bonus 1,000 points once you break the $1,000 spending mark every month. This means that if you spend under $1,000 or over $2,000 monthly, the cash back option might be best; otherwise, the points option will be the best bang for your buck.

Note that while Wells Fargo advertises that the card does not come with an annual fee for the rewards program, every card costs $25 per year. However, there are no foreign transaction fees and the APR is relatively low compared to other secured cards on this list.

Want to learn more about the Wells Fargo Business Secured Card? Check out Merchant Maverick’s complete review.

BBVA Compass Business Secured Credit Card

Another secured card, BBVA offers a second solution for struggling businesses. Unfortunately, this card is only available in Alabama, Florida, Texas, Arizona, Colorado, California, and New Mexico, which could eliminate many potential applicants. Additionally, you’ll need to apply in-person in order to sign up for this card.

Like Wells Fargo’s offering, BBVA’s card requires a minimum deposit of $500. You’ll then be able to make deposits at any time in $100 increments. Additionally, you’ll need to pay a $40 annual fee, although that’s waived the first year.

This card does feature a basic rewards program that dishes out one point per $1 spent on every purchase. You’ll then get two-times points on gas station and restaurant purchases and three-times value on office supply purchases.

As a plus, employee cards are free — and the APR for the BBVA card is right around average for secured cards. You’ll also be entitled to Visa’s business benefits program, which covers a damage waiver for car rentals, purchase security to protect against theft or damage, extended warranty, and emergency travel services.

Capital One Spark Classic for Business

This cashback card from Capital One could be a great option for businesses operating with average credit. With the promise of 1% back on every purchase and no annual fee, you will be earning money with this card from the get-go. Plus, unlike the above two cards, this is not a secured card so you won’t need to worry about putting down a deposit.

Spark Classic’s APR is unfortunately high compared to the other cards on this list, but it comes with no foreign transaction fees. You’ll also gain access to Visa’s business benefits program, which includes a damage waiver for car rentals, purchase security to protect against theft or damage, extended warranty, and emergency travel services.

Do note, however, that this card is aimed at users with fair or average credit. As such, if you have poor or bad credit, this card may not be for you. It still makes an excellent choice, though, if your business is in the process of rebuilding credit and can’t quite score one of those top-tier cards yet.

Take a deep dive into the Capital One Spark Classic for Business with our full-on review.

Top Personal Credit Cards For Subprime Borrowers

If none of the business credit cards work for you, using a personal card for business purchases is also an option. You won’t always be able to obtain employee cards if you go this route, nor will you be likely to earn rewards targeted at business use. However, personal credit cards can still help you build up your credit history.

Here are our top picks for subprime personal credit cards:

Credit One Bank Platinum Visa for Rebuilding Credit

If your business is looking to rebuild credit card without resorting to a secured card, this option from Credit One Bank could work. It features a simple 1% cash back rewards scheme that dishes out money for eligible purchases.

You can also take advantage of viewing your Experian ScoreX credit score every month—a great tool while you’re still improving your credit history. You’ll further be able to take advantage of various Visa benefits, including $0 fraud liability, travel insurance, and shopping discounts. Credit One Bank will monitor your credit report to automatically boost your line of credit, although a fee may apply.

Do note that this card’s APR sits towards the upper end when considering the other cards listed. You may also have to pay an annual fee. During the first year, the potential annual fee ranges from $0 to $75; the range for later years goes from $0 to $99 per year. Foreign transaction fees aren’t waived and you’ll need to pay either $1 or 3% of each purchase.

Visit the Merchant Maverick review for the full picture on the Credit One Platinum Visa.

Discover it Secured

In terms of personal secured credit cards, it’s hard to beat the Discover it. This card packs in an excellent rewards scheme when compared to other secured cards: you’ll net 2% cash back for every gas station and restaurant purchase and then 1% back everywhere else. On top of those base rewards, Discover will match your cash back total at the end of your first year, effectively giving you 4% back at gas stations and restaurants, and 2% back everywhere else.

Discover does offset that excellent rewards scheme with a hefty APR, however. Of course, if you are successfully using the card to boost your credit history, the APR rate shouldn’t really matter to you. You’ll also want to note that the card requires a minimum $200 deposit with a maximum of $2,500. This deposit is refundable.

Back on the plus side of things, there is no annual fee, nor is there one for foreign transactions. Additionally, you’ll be able to see your FICO credit score on every monthly statement for free. There are additional security benefits, including $0 fraud liability, free notifications if your Social Security number shows up on a risky website and free overnight shipping for a replacement card to any U.S. street address.

Green Dot primor Visa Gold Secured Credit Card

This card from Green Dot Bank is a basic secured card with no rewards scheme. However, it still includes a few nifty benefits. The highlight is the card’s low APR of 9.99%. This is far lower than any other card on this list and it’s also one of the lowest rates you can get on any card—secured or not.

Green Dot Bank enforces no minimum credit score requirement. This makes the card an excellent choice if you lack a credit history, or if your score is incredibly low. Your activity on this card will be reported to all three credit bureaus, helpful for making sure your credit history is properly documented so it can improve. Plus, depending on how much you deposit, your credit line has a wide range of variance, from $200 to $5,000.

However, this card will cost you $49 every year due to its annual fee. You’ll also be charged 3% for each foreign transaction.

Final Thoughts

Trying to rebuild broken credit or create a credit history from scratch can be frustrating. Thankfully, though, there are credit cards out there that can help you out. By staying on top of payments and utilizing your credit properly, you’ll be well on your way to improving your credit score.

If credit cards won’t help you in your current situation, a small business loan might help. You can also look at loans that work for startups.