Ask an Expert: Best Credit Card After a Bankruptcy?

Photo (cc) by mikecogh

I review dozens of credit card offers each week to find the best deals. Check out more on our credit card page. Have a question? Email me.

A Money Talks News reader asks…

“Jason, how can I start building my credit? My Chapter 7 Bankruptcy became official as of January 2012 and I would like to start rebuilding my credit. Where can I apply for a credit card to start improving my credit score?”
– Viviana

Thanks for the question, Viviana. Here’s your answer…

As you’ve found, Chapter 7 bankruptcies are devastating to your credit. But it’s not the end of the world. Right now, you can get a secured credit card that will immediately begin helping you improve your credit score.

Secured card offers require you to make a deposit first, sometimes as little as $200. Usually, this amount then becomes your credit limit, and the card works just like any other. You have to pay your bills on time, and you’ll get hit with interest charges if you carry a balance. The good news is that many of these cards come with car rental insurance and other benefits that aren’t available when you use cash, check, or even a debit card.

But there’s a catch.

Many secured (and unsecured) credit cards marketed to people rebuilding their credit are full of unnecessary fees and exorbitant interest rates. In fact, one of these cards was nearly the subject of government action.

Fortunately, there are several good secured card options available, even within a year of bankruptcy. The New York Times looked into which secured cards guarantee acceptance and found that HSBC and Capital One both promise to make theirs available to those who have discharged their debts, established their identity, and provided a deposit.

Since Capital One is the rare secured card that extends a line of credit in excess of your deposit, you might not get approved automatically. Therefore, try the HSBC (Orchard Bank) Secured MasterCard. It has no annual fee the first year ($35 after that) and a low standard APR of 7.99 percent. There’s a $200 minimum deposit, but it actually earns interest.

I would use this card for a year and be very careful to make all your payments on time. Doing so will allow you to apply for secured cards while your credit improves. You’ll then be eligible for unsecured cards after a few years of consistent payments.

By going through Chapter 7, you’ve committed yourself to starting over financially. Fortunately, there are companies willing to give you the opportunity to rebuild your credit right now. For more ways to build credit than just with credit cards, check out 8 Tips to Get Credit When You Don’t Have Any.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
12 Tech Gadgets That Make Daily Life Easier
12 Tech Gadgets That Make Daily Life Easier

These products on Amazon will ease worries and simplify your routine.

7 Reasons You Should Not Claim Social Security Early
7 Reasons You Should Not Claim Social Security Early

The sooner you claim your Social Security retirement benefits, the more you — and perhaps also your spouse — stand to lose. Here are the stakes.

15 Purchases That Make Life Easier As You Age
15 Purchases That Make Life Easier As You Age

There are many products that can make getting older — or any time of life — a little easier.

Here’s the Average Retirement Age in Your State
Here’s the Average Retirement Age in Your State

Are you on track to retire at the same age as most residents of your state?

7 Ways Coupons Waste Your Money and Time
7 Ways Coupons Waste Your Money and Time

Here’s why I hung up my scissors and quit clipping coupons.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

Do This in the Car If You Want to Avoid COVID-19
Do This in the Car If You Want to Avoid COVID-19

It takes just seconds to take this simple preventive measure.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

15 Products You Need — Even If You Didn’t Know It
15 Products You Need — Even If You Didn’t Know It

Discover some must-have products on Amazon that you didn’t even know you were missing.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.