Low credit line credit cards are still as popular in 2016 as they were 15 years ago, targeting many of today’s credit challenged adults with high interest rates and annual fees that almost dwarf available credit lines given. We look at today’s more prevalent low credit line credit cards to see if they’re worthy of your time.
I’d previously discussed how low credit limit credit cards cost more in the long run. But when your back to square one in your credit rebuilding process, chances are you’ll take whatever life boat sails your way. In 2016, these are perhaps the best low credit line credit cards to choose from, although one should be vigilant in keeping their balances minimal on these cards.
Credit One Bank
Known for their ridiculous annual fee and low initial credit limits, those recovering from bankruptcy or wanting to start their rebuilding journey fresh often turn to this easy to qualify for credit card. With initial starting limits around $300, it’s definitely an ‘ok’ card to manage. Most people in the process of rebuilding, according to MyFico forums, start with Credit One because it’s the easiest path from bankruptcy to a 700 score in two years flat.
Because Credit One doesn’t give everyone a grace period for purchase payments and offers a $0-$99 annual fee based on credit worthiness, I would personally keep this card open for roughly 11 months and close it before the annual fee posts.
First Premier Bank
Another of today’s more popular low credit line credit cards comes from First Premier Bank, which starts many out between $300 and $400. There’s an outlandish $95 processing fee, a $99 annual fee (reduced to $49 at year two) and little to no tolerance for late payments. But for those unworthy borrowers trying to rebound, this card serves a purpose: post something positive on credit reports until prime lenders feel comfortable lending to them again.
To keep this card and expect it to grow with you is ludicrous: every credit limit increase will cost you 25% of the new line granted, meaning a paltry $100 CLI will cost $25.00. Which isn’t worthy, of course, so many card holders chomp the bit and keep their measly limits – in the sock drawer, preferably.
Discover IT Secured
Why bother including Discover (a prime lender) in my list of low credit line credit cards in 2016? Well, many people won’t “straight up” make it into Discover’s doors unless they’re at least 6 months clear of bankruptcy discharge, are 5 or more years clear of derogatory payment entries on their credit report, or are students. One great way to get the benefits that Discover gives their cardholders without having to have the greatest credit is by getting a secured card, which gives a credit line equal to what you deposit.
Don’t get me wrong, Discover is still strict with their secured card applicants. However, they’re not as strict as their unsecured application implies. If you can get this card, it will be one of the best low credit line credit cards you’ll ever own. This card can graduate to an unsecured line, meaning your deposit can be returned after ‘x’ months paying on-time.
Not All Low Credit Line Credit Cards Are ‘Good’
We may have left several of the ‘bottom feeders’ like Continental Finance off this list; it was with good cause.
Most of today’s predatory lenders (the aforementioned being the best example) offer ridiculous monthly fees, annual fees, hidden fees, calling in to pay fees and even fees that get stuffed inside more fees. It’s truly shameful that banks like this harass the credit challenged, but people still fall for their antics because they need help in rebuilding what was inadvertently damaged.
When searching for low credit line credit cards to apply for, keep in the back of your mind that you’ll need to be able to pay your balance in full every month so a $0 balance reports consistently each month. This helps your utilization, which along with average age of accounts (AAoA) can significantly increase your score, lower your overall utilization and put you in a really good position to apply for Capital One credit products.
Although low credit line credit cards in 2016 may seem ‘too low’, they’re designed for a purpose – not with longevity in mind.