Credit Cards for Disabled People: An Overview
The information in this article is current as of November 30, 2021.
Credit cards provide a convenient way to pay bills, book a hotel, rent a car, or cover emergency expenses. They also help build a credit history. However, the National Disability Institute report confirms that credit cards for disabled people can be challenging to obtain.
People with disabilities often have low-wage or temporary jobs, which makes obtaining credit a challenge. For example, the report states 27% of disabled adults live in poverty (page 1), and 37% do not have credit cards (page 41-42).
If you want to improve your credit score, an excellent way to do that is responsible credit card use. Keep reading for tips on obtaining and using credit cards to build your credit score.
Contact Your Bank
Talk to the people with your bank accounts about applying for a MasterCard or Visa credit card. You may be able to speak with an administrator regarding your application. Explain that you are trying to build your credit.
They may be able to provide you with credit-building options. They may also suggest that rather than a standard credit card, you apply for a secured credit card.
What Is a Secured Credit Card?
Secured credit cards help you establish yourself by building a credit history. But, first, you need to understand the difference between this type of credit and standard credit cards.
With a secured credit card, you deposit a specific amount of cash when you open the account. The amount is usually between $200-$500.
The deposit is a security deposit to cover charges if you don’t pay your credit card bill. It is also your credit limit on the card. If you use the card responsibly and always pay your bill on time, you will probably qualify for unsecured credit after about a year.
To use the secured card to build your credit rating:
- Only make 1-2 small purchases every month
- Pay the balance in full every month before the due date
- Watch your credit score, and when it shows significant improvement, ask the provider about upgrading to an unsecured card.
Like a regular credit card, you will be charged interest if you don’t pay the bill in full each month. However, the interest rate on a secured credit card is often higher than on an unsecured card.
Your bank can let you know if the card allows you to upgrade to an unsecured account. Some banks require you to complete a separate application for an unsecured card. When you no longer need the secured card, close the account, and your security deposit will be returned to you.
Secured Credit Card vs. Prepaid Debit
Many people who are unable to obtain a standard credit card use prepaid debit cards. While their use is similar to a credit card, they do not provide you with a credit history. This is because you load money onto the debit card and then use your own money to purchase.
A standard debit card is also different from a Direct Express card. Direct Express is a debit card loaded by the government with Social Security or Veteran’s benefits. You are not able to add funds to your Direct Express card.
With both Direct Express standard debit cards, you are using your own money. No money is on loan from a lender, so no reports go to credit bureaus.
Secured Credit Cards for Disabled People
The following companies offer secured credit cards. Your payment history is sent to credit bureaus. This allows you to build your credit history, increasing your chance to qualify for an unsecured credit card.
Discover It Secured Credit Card
This card allows you to build a credit history with all three major credit bureaus. Then, you select the security deposit amount. The security deposit is fully refundable when you close the account.
With Discover It, you have the benefit of earning 2% cashback when you use your card at gas stations and restaurants. You also earn 1% cash back for all other purchases. Discover matches all cash back you earn at the end of your first year.
About 99% of the places throughout the country that accept credit cards take Discover. In addition, there is no annual fee, making this an affordable card.
Discover It conducts automatic reviews beginning eight months after you open the account. The review determines whether you are ready to transition to a standard Discover credit card. This implies the transition from secured to unsecured credit.
Capital One Platinum Secured Credit Card
This Capital One credit card allows you to pay as little as $49 toward your security deposit. You can then make installment payments until you deposit enough to activate your card.
When you make timely payments against your credit card bill, you automatically receive a review for a higher credit line after six months. In addition, this Mastercard credit card has no annual fee, and you receive 1.5% cashback credit on all purchases.
Chime Credit Builder Visa Credit Card
Chime Credit Builder’s Visa card offers some great perks. These include no minimum deposit, no annual fee, no interest, no credit check, and you can automate your payments.
Chime is not a bank; they are a financial technology company. This means they use technology to provide services through software and algorithms using computers and smartphones.
To receive their credit card, you need to have a Chime spending account. They report payment history to the three major credit bureaus—Equifax, Experian, and TransUnion.
Non-secured Credit Cards for Disabled People
Some companies will provide a non-secured credit card to those who have poor or non-existent credit. However, you should review the details of those credit card offers carefully, as many come with considerably higher interest rates and annual fees. Unsecured means you do not pay a deposit to obtain the card.
Petal Credit Cards
Petal Card is available with two options. First, when you visit their website, click the “start applying” tab. After filling in your information, you will see what Petal card is right for you. There is no impact on your credit score for inquiring.
The difference between this card and those above is this is not a secured card.
Petal 1 Card has no annual fees and a credit limit of $500-$5,000. They do offer cashback payments of 2% to 10% at specific merchants. The annual percentage rate (APR) for this card is 19.99% to 29.49%.
When considering you for this card, Petal 1 looks at your credit and cash scores, your banking history. You may qualify for a credit line increase within six months by making on-time payments and keeping your credit score within their recommended range.
Petal 2 Card has no fees and a credit limit of $500-$10,000. In addition, they offer cashback payments of 1% to 1.5% and higher amounts at specific merchants. The APR varies between 12.99% to 26.99%. Petal considers this their most advanced card.
Total Visa Credit Card
The Total Visa Credit Card is designed for people who have financial challenges or have trouble obtaining credit. You can complete your application online. The card offers manageable monthly payments, reports to all three major credit bureaus, and is usable online and in-store.
You do need to have a checking account. Be aware that you need to pay an $89 program fee to receive your account if you receive approval. This card has a high 34.99% annual percentage rate.
Surge Master Card
When you apply to Surge Master Card, you can prequalify without making a hard inquiry on your credit report. If you receive approval, your credit limit will likely fall between $300 to $1,000.
Your payment history is sent to the three credit bureaus every month. After six months of on-time payments, your credit limit may double.
This card does have an APR between 24.99% to 29.99%. However, they charge an annual fee of $75 to $99.
What Is Better—Secured or Unsecured?
When deciding between a secured or unsecured card, you may wonder which is better. For example, a secured credit card may be the better option to build your credit history.
A secured card is easier to qualify for if your credit score exceeds 580 or you have no credit history. If your credit score is 670 or higher, you may qualify for an unsecured credit card. In addition, unsecured cards offer more “perks” for dining out, gas, groceries, and more.
When deciding what to apply for, consider interest costs if you cannot pay the balance in full. For instance, if you make a minimum payment, leaving a $150 balance on a Chime secured credit card, there is no interest, so the unpaid balance does not change.
If you use an unsecured Total Visa card, they charge 34.99% interest, so you incur $52.49 in interest on the unpaid balance. This means the following month; you owe $202.49 without making any more purchases.
Considering interest plus annual fees, having an unsecured credit card may cost you a considerable amount of money.
The Application Process
The application process varies depending on the lender you use. The basics for applying and receiving a credit card are:
- Submit your application
- Pay your security deposit
- Receive your card
- Use the credit card for small purchases
- Pay your bill each month, try to pay in full to avoid finance charges
- The issuer reports your payments to the credit bureaus
- Build your credit score
- Upgrade from your secured to an unsecured credit card
One way to watch your progress in building your credit is to receive monthly updates from Credit Karma. This free service allows you to read your credit reports, see your credit scores, and review what is impacting your score.
Increase Your Credit Score Using Credit Cards
Now you know credit cards for disabled people are not impossible to obtain. Begin by building your credit score through the use of a secured credit card. Within about 12 months, you may be able to transfer that card into an unsecured credit card.
Always read credit card applications carefully, so you know interest rates and annual fees, and be confident you can meet these commitments before applying. Then, enjoy watching your credit rating improve with monthly Credit Karma reports.
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