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What Are Bankruptcy-Friendly Credit Cards?

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In a Nutshell

If you've recently filed for bankruptcy, or are considering filing, you may be worried about getting access to a credit card. Luckily, there are plenty of bankruptcy-friendly credit cards on the market that will help you get access to credit and start to rebuild your credit history.

Written by Kristin Turner, Harvard Law Grad.  
Updated October 1, 2021

After you've completed the process of filing for bankruptcy, it's time to start rebuilding your finances and getting your financial situation back in order. A great way to do this is through bankruptcy-friendly credit cards.

Your credit score will drop after filing for bankruptcy, but it's not ruined forever. The effect of bankruptcy on your credit score will diminish as time passes, but it will stay on your credit report for 7-10 years. The length of time depends on which type of bankruptcy you file. While your score will recover over time, you can also proactively work to repair your credit score. Bankruptcy-friendly credit cards are a great way to do this and lessen the effects of bankruptcy.

Bankruptcy-Friendly Credit Cards 101

If you've just gotten your bankruptcy discharged, then the best thing you can do for your finances is to take advantage of your fresh start and rebuild your assets. Bankruptcy-friendly credit cards are a great way to improve your credit score and get back on your feet.

Once you've been approved for a new credit card, it’s important to practice healthy habits.

  • Don’t overspend. Stay on track by not spending more with your credit card than you can afford to repay. If you can afford it, try to get as high of a credit limit as possible. Spending and repaying large amounts on your credit line will raise your creditworthiness much faster.

  • Pay on time. Cardholders with low credit scores will be subject to higher interest rates, but if you pay your balance on time and in full, you won't get stuck paying interest.

  • Monitor your credit score. Keeping a close eye on your credit score will help you repair your credit score faster.

Types of Bankruptcy-Friendly Credit Cards: Secured vs. Unsecured

There are two primary types of credit cards: unsecured and secured. An unsecured card is your everyday credit card. But these often require borrowers to have a minimum monthly income and active checking account, and they may be harder to get after bankruptcy.

Secured cards are more bankruptcy-friendly. These cards require you to put down a deposit, which acts as your line of credit. So, if you deposit $200 on the card, you'll have a $200 limit. This deposit is refundable if you pay the card off or close it. Secured cards can help you boost your credit score faster. As you start to improve your score, you can work your way up to an unsecured credit card.

Bankruptcy-friendly credit cards with low annual rates and cashback offers will help you rebuild your credit score and save money in the process.

Secured Bankruptcy Credit Cards To Consider

1. Discover it Secured Credit Card

The Discover it Secured Credit Card is a great option for those looking for cashback rewards! With a $200 minimum deposit and no annual fee, so you can rebuild your credit without putting a nick in your bank account.

(+) Earn Monthly Spending Checks: One of the best perks about this bankruptcy-friendly credit card is that if you improve your credit score enough over the course of using it, Discover will automatically perform monthly checks on your spending habits. If you meet their requirements, they'll automatically refund your deposit without the need to close the card.

(+) Get Cashback: The Discover it Secured card offers 2% back on the first $1,000 you spend on gas and groceries combined each quarter, as well as an unlimited 1% back on all of your other purchases.

2. Capital One Secured Mastercard

If you feel that the minimum $200 deposit for the Discover it card is too high, then consider applying for the Capital One Secured Mastercard. This card is a great entry point when rebuilding your score.

(+) Flexible Deposit: Capital One allows borrowers to deposit $49, $99, or $200, depending on their creditworthiness. These deposits are refundable and qualify users for a starting credit line of $200. After five months of timely payments, users will have the ability to qualify for higher monthly amounts.

(+) No Added Fees: That’s right — no annual fee, balance transfer fee, or foreign transaction fees. So, the deposit is the only amount you'll end up paying to use this card.

(-) Your Case Must Be Closed: Capital One won't approve you for this card if your bankruptcy is marked as unresolved. So before applying for this card be sure that your bankruptcy filing is completely discharged.

(-) High Interest: This card also comes with a fairly high APR, so ensure that your payments are always on time. Capital One doesn't offer any rewards for this card, so its sole purpose is to help users rebuild their credit with a low deposit amount.

How Bankruptcy Affects Your Credit Score

A Chapter 7 bankruptcy filing will stay on your credit report for up to 10 years. But your discharged debts will be removed from your report after seven years because of the statute of limitations. As time passes, your bankruptcy will impact your credit less and less. Using a bankruptcy-friendly credit card will help improve your credit score and increase your credibility with potential lenders, allowing you to resume normal financial routines.

Isn't Taking On More Debt After Bankruptcy a Bad Idea?

It might seem strange to take on more debt shortly after a bankruptcy discharge ... shouldn’t you be trying to avoid that?

Well, yes and no. The key is to have a manageable amount of credit. This will help you build a stable credit history. Making regular, on-time payments on your account shows future lenders that you're a reliable borrower.

Let's Summarize...

Bankruptcy-friendly credit cards can be very helpful after a bankruptcy discharge. They allow you to rebuild your score in a manageable way. The limits are low and the focus is on raising your score.

The best way to take full advantage of a secured credit card is to spend responsibly and pay on time every time. Then, watch your credit score improve! Secured credit cards can help you get back on your feet after filing bankruptcy.

Written By:

Kristin Turner, Harvard Law Grad


Kristin is a recipient of Harvard Law School’s Public Welfare Foundation A2J Tech Fellowship. At Harvard Law, she served as a member of the Harvard Defenders, the Women’s Law Association, and the Harvard Law Negotiation Review. She was the 2016 – 2017 president of the Harvard Bla... read more about Kristin Turner, Harvard Law Grad

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