Cards for Credit Problems

It's tough for people with credit problems to get credit cards that don't come with high interest rates. However, people who don't rack up big balances and pay their card issuers' bills on time use high-interest cards to improve their credit ratings. They may eventually qualify for other credit cards with better terms, but in the meantime can explore cards for credit problems.

Secured Credit Cards

Secured credit cards offer people with credit problems the opportunity to build a better credit history. Secured card issuers usually require applicants to make a deposit to a savings account that serves as collateral for the credit account. The amount of the deposit usually establishes the cardholder's credit line as well. For example, someone who deposits $1,000 receives a $1,000 credit line. People who make on-time monthly payments to their card issuers can eventually improve their credit ratings.

Orchard Bank

Orchard Bank (orchardbank.com) promotes three regular credit cards and a secured card to people who have credit problems. The bank determines which card applicants receive after their credit histories are reviewed. CNN Money includes the Orchard cards on its 2011 list of the best cards for people with bad credit. People who have better credit histories usually pay lower fees and lower interest rates. Orchard's unsecured cards have annual fees that range from $39 to $59, and interest rates are as high as 19.9 percent. Still, CNN Money notes that some unsecured cards for people with bad credit come with interest rates of nearly 30 percent.

Capital One

The Capital One (capitalone.com) secured MasterCard also is on the CNN Money list partly because the annual fee charged for the card is just $29. Furthermore, applicants can get a $200 credit line even if they only submit a $49 security deposit to open an account. People who deposit $100 or more can get credit lines as high as $3,000. However, CNN Money says cardholders should avoid carrying a balance from month to month because the interest rate on the card is just shy of 23 percent.

Considerations

The U.S. Federal Reserve Board warns consumers to find out if secured card issuers charge application fees or other fees before they apply for a card. The FRB says consumers also should find out if those fees are refunded if an application isn't approved. Some credit repair companies offer credit cards to people with bad credit as they try to sell their credit repair services. These companies claim they can clean up people's bad credit histories. However, the FRB notes that only legitimate errors can be removed from credit reports. Good credit management is what improves people's credit ratings over time.