It may seem counterintuitive, but one of the best ways to improve below-average credit is to get a credit card. The right card can help you build credit without getting in over your head and may even help you earn rewards.
If you need to turn your credit around, here are three credit cards to check out.
1. The Discover it Secured Card
Rewards: 2% cash back on up to $1,000 in quarterly spending at gas stations and restaurants; 1% cash back on other purchases.
Sign-Up Bonus: This Discover card will match the cash back you earn in the first year.
Annual Fee: $0
Annual Percentage Rate (APR): Variable 23.99% APR on purchases; 10.99% APR for six months on balance transfers, then variable 23.99% APR.
Why We Picked It: This secured card earns cash back rewards and helps you build credit over time.
For Your Credit: You'll need a security deposit of at least $200 to open an account, and your initial credit line will equal the amount that you've deposited. Other than that, the card functions just like a normal credit card. After eight months, Discover will start reviewing your account and may refund your security deposit if you've been using your card responsibly.
Drawbacks: If you don't own a car or dine out often, the rewards aren't as valuable.
2. Capital One Secured Mastercard
Rewards: None
Sign-Up Bonus: None
Annual Fee: $0
APR: Variable 24.99% on purchases and balance transfers.
Why We Picked It: After a short period of timely payments, Capital One will increase your credit limit.
For Your Credit: This secured card requires a deposit of $49, $99, or $200, depending on the state of your credit, to secure an initial credit line of $200. After five months of timely payments, Capital One will give you a free credit limit increase, which can result in stronger credit.
Drawbacks: There are no rewards.
3. Capital One QuicksilverOne Cash Rewards Credit Card
Rewards: 1.5% cash back on all purchases.
Sign-Up Bonus: None
Annual Fee: $39
APR: Variable 24.99% APR on purchases and balance transfers.
Why We Picked It: Consumers with fair credit can earn a competitive cash back rate.
For Your Credit: If your credit isn't awful but still needs some work, this card is for you. It's intended for those with fair credit but still earns 1.5% cash back on every purchase.
Drawbacks: There's a $39 annual fee.
How to Choose a Card for Turning Your Credit Around
Improving your credit should be your main financial priority, and you should choose a card that will help you accomplish that goal. All other considerations, including rewards and perks, should come second. Make sure to pay close attention to the fees and APR costs associated with any card you're evaluating.