Credit Card Alternatives
For Poor Credit

Credit card alternatives may save the day when you can't fulfill the requirements set forth by the conventional FICO scoring model for obtaining a credit card.

You may be in luck! Even with a lack of adequate credit history, some credit card issuers are working to alleviate the challenges faced by potentially desirable credit consumers.

Young woman with laptop and dog: are there credit card alternatives for poor credit?

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They are considering credit worthiness based on other underwriting standards such as employment stability, income or availability of funds. Read on to find credit card alternatives that might float  your boat.

These alternative credit cards work like credit cards or like charge cards. The key difference between credit and charge cards is that charge cards are intended for balances to be paid in full with each cycle. The two are otherwise very similar, and taking into account that it is strongly advised to pay credit card balances every month, they can in fact be quite similar.

The point is that even with poor credit, little credit or no credit at all, you may have options and some credit card alternatives may be simpler to get than you might think, while giving you comparable benefits.

Among them, secured credit cards are undoubtedly a true and tried option to obtain a credit card when your eligibility does not otherwise allow it, but the required down payment is not always feasible.

In that case, the best option might be some of the alternatives credit cards discussed below.

Credit Card Alternatives: Best For No Credit History

There are a variety of reasons for people to have no credit history. Individuals could be newly arrived in the country and may not have a Social Security number. They may also have never needed or wanted to join the credit card game or have simply never applied for credit for whatever reason.

Here is a good place to start:

The Tomo Credit Card

The Tomo Credit Card is intended for credit building. It works for people who want to raise their credit score but are in a catch-22 because of a low credit score or lack of credit history that makes them unable to obtain the credit products that will facilitate this process for them in the first place.

The Tomo credit card is an unsecured credit card that requires no credit check, no security deposit, no annual fee, and has 0% APR since you cannot carry a balance.

Tomo is offered by the San Francisco startup TomoCredit through New York’s Community Federal Savings Bank and via the Mastercard network.

Credit worthiness is assessed by linking your bank account and having other factors taken into account, such as income, and checking and savings account balances. Through this, the underwriters will determine your credit limit from $100 to $10,000.

Your payment history is reported by the three major credit bureaus (Experian, Equifax, and TransUnion).

In addition to helping customers improve their credit profile, the Tomo card comes with a list of benefits including among others:

  • No foreign transaction fee

  • Access to international emergency services for assistance with travel-related card needs, such as replacing lost or stolen cards

  • World Elite concierge: Get access to a round-the-clock service that can arrange dinner reservations, find tickets to events, or assist with travel arrangements

  • Cell phone insurance: up to $1,000 in cell phone insurance coverage for eligible stolen or damaged phones

  • World Elite Mastercard features: Nearly all of the Tomo Credit Card's extra features

Sign-up bonuses, cash-back and rewards are not offered and probably not expected by new Tomo cardholders. This is about starting or rebuilding a credit profile.

Also, bear in mind that Tomo is an entry-level credit card that may have a few limitations compared to more established top brand credit cards. It is a good pick primarily to help raise FICO scores.

Credit Card Alternatives: Best For Poor Credit

Grow Credit Mastercard

Another starter credit card for those with little or no credit history is Grow Credit.

This one works by first having at least one significant subscription such as your monthly phone bill, streaming service, favorite major app, etc.

You can then apply for your Grow Credit card and use it to pay for that subscription. Your payment clears the balance and the activity disclosed to the credit reporting agencies every month, helping you to build or rebuild your credit.

No credit check or hard pull is done, and you enjoy 0% APR while your consistent monthly payments contribute in making your credit better and better.

The Grow Credit Mastercard is available to legal US residents who are at least 18 years old. The only additional requirement to your subscription to a digital service is to have a bank account from which your payments will be made.

Since the Grow Credit Card is restricted to the maximum amount allowed for your subscription payments, it doubles as a great guard rail for those who are susceptible to rack up credit card debt.

All three of the major credit bureaus receive timely payment and credit limit information from Grow Credit. This ensures that when a user applies for new credit, other lenders will take into account their good credit behaviors.

For those interested in obtaining a higher credit limit for premium subscriptions, a $2.99 membership monthly fee is charged ($29.99 per year). Your spending limit will then go from $204 per year to $600 per year. Either plan is reported to the credit bureaus and helps boost your FICO score.

Credit Card Alternatives: Best Unsecured Card For Low Credit Score

The Avant Credit Card

The Avant credit card is an unsecured credit card (no deposit required) with an initial credit limit of $300 (and up to $2000). The initial limit can be raised upon request but this requires good credit utilization and on-time payments for at least a number of months.

The phone number to call for credit limit increase is 1-855-AVANTCARD. Automatic reviews otherwise take place periodically and credit limit increases can be requested after maintaining positive credit habits that exhibit a good trend.

Applicants for the Avant credit card can be approved with FICO scores as low as 550, all other requirements being adequate (recommended 630-689 average). In fact, they encourage fast income and employment verification through their online verification tool (OVT).

Pre-qualification is also available. This allows you to check your chances of approval without incurring a hard pull on your credit.

It is possible to request a second Avant credit card by setting up another profile. If you are successful, this is another tool to increase your available balance and lower you credit utilization ratio, which amounts to 35% of your credit evaluation.

Avant reports to the three major credit bureaus and charges no foreign transaction fees.

That said, the card does have an annual fee of $39. Keep in mind that in contrast, secured credit cards require a security deposit but it is refundable, sometimes as soon as your creditworthiness is re-evaluated for the better. They typically do not charge an annual fee.

The Avant Credit Card is worth it if your goal is to improve your FICO score without incurring costs like a security deposit, and getting started with a decent credit limit.

Then, you can improve your chances to ultimately be approved for better credit cards with higher limits, cash-back, rewards and various other perks.

Credit Card Alternatives: Best Low Credit Innovation Card

Petal Credit Card 1 and 2

You can check for pre-approval on the Petal card that is right for you with no impact to your credit score.

Applicants can be approved with no specific credit score requirement, poor credit or limited credit history.

Whether you need help establishing credit for the first time, rebuilding your credit profile or raising your credit score, Petal is a legitimate credit card to get you there.

Issued by WebBank, Petal offers 3 options:

  1. Petal 1
  2. Petal 1 Rise
  3. Petal 2

Choose one according to your preferences, but make sure you review details such as annual fee or not, in one or the other options.

Petal 1:

  • Easy application with no credit check
  • Charges no annual membership fee
  • Gives cash back at select local & national merchants, 2% – 10%
  • Has a credit limit of $300 to $5,000
  • Pledges a path to credit limit increase if requirements are met
  • No foreign transaction fees

Petal 1 Rise:

  • Easy application with no credit check
  • Charges an annual membership fee of $59
  • Gives cash back at select local & national merchants, 2% – 10%
  • Has a credit limit of $500 to $3,500
  • Pledges a path to credit limit increase if requirements are met
  • No foreign transaction fees

Petal 2:

  • Easy application with no credit check
  • NO annual membership fee, no fees of any kind
  • Gives cash back on everyday purchases and more offers 1% – 1.5%
  • Has a credit limit of $300 to $10,000
  • Pledges a path to credit limit increase if requirements are met

With Petal’s Leap program, you can earn a credit line increase with 6 months qualifying consecutive on-time payments (15% of your monthly balance or minimum payment, whichever is greater).

As you can see, unlike most other credit-building credit cards, the Petal 2 credit card comes complete with rewards. These include up to 10% cash back on purchases with select merchants.

Credit Card Alternatives: The Extra Card

Meet the first debit card that builds credit and earns rewards.

Your purchases and payments are listed and reported to the Equifax and Experian credit bureaus. In the process, your credit utilization ratio is reset daily - rather than accrued - and this builds your credit.

All you have to do is connect the card with the bank account you normally use for everyday purchases.

There is no credit check and no APR. When you sign up for the card, you connect it to your bank account and you receive a spending limit based on your bank balance and other factors.

The more purchases you make with the Extra Card, the more you can increase your spending limit.

At the time of your purchases, Extra covers the payment for you and reimburses themselves the next business day. At the end of the month, they add up all your transactions and they report them to the credit bureaus as would regular credit cards.

If building or rebuilding you credit is a top priority, this is an option worth considering. The Extra Card comes with 2 payment plans:

  • The Credit Building plan: $20 per month or save at $149 per year
  • The Rewards + Credit Building plan: $25 per month or save at $199 per year

There you have it! In a pinch due to poor credit, don’t let that linger. Strong credit is a pillar of personal finance health. Start rebuilding your profile with the above credit card alternatives.

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