Is There An American Express Credit Card for Bad Credit

Jordan Wathen is a personal finance expert with a deep professional and personal expertise on credit cards. His articles have appeared on sites such as MSN, CNBC, and Yahoo.

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American Express is one of the few issuers with a limited lineup of credit cards for people with limited credit histories or bad credit. Case in point, there's one American Express credit card for bad credit. Learn more below and see if the card is a fit for you.

Blue from American Express®
Our Bottom Line

One of the few American Express cards available for people with low credit. The 1x earn rate for purchases is a welcome addition in a category where rewards are rare.

What we Like:
  • Earns rewards
  • Credit score range for approval
  • No annual fee
Key Scores:
3.5 5 Perks
3.5 5 Fees
3.5 5 APR
Perks 3.5/5
Fees 3.5/5
APR 3.5/5
  • Annual Fee: $0
  • Regular APR: 25.74% variable APR on purchases.
  • Intro APR: Purchases: N/A Balance Transfers: N/A
Highlights
  • Earn 1X Membership Rewards® point for every eligible dollar you spend.
  • No annual fee.
  • Free ShopRunner Membership.
  • Online Year-End Summary of Purchases.

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Why you can trust me

Most important credit cards on the market aren’t high-octane rewards cards, but credit cards that help people build or rebuild their credit scores to get back on solid financial footing. Unfortunately, the market for credit cards for people who have bad credit is saturated with bad cards that have punishingly high fees or ridiculous terms and conditions. For this reason, I’m always looking out for the best offers that are a true win-win solution for card issuers and customers alike.

What we like about Blue from American Express®

Historically speaking, American Express was a company that favored people who had high incomes, high credit scores, and used credit cards solely for convenience and rewards. In recent years, with products like Blue from American Express®, it has started to compete more aggressively in mass-market credit cards.

Here are some of the features that help Blue from American Express® stand out in cards for people who have bad credit:

  • Rewards program -- Blue from American Express® rewards cardholders with 1 point for every $1 in spending. Points are most valuable when redeemed for airfare or Uber ($0.01 per point), but they can also be redeemed for Amazon purchases ($0.007 per point) and statement credits ($0.006 per point). While it isn’t the most lucrative rewards card, not many cards in the bad credit category even have rewards programs in the first place.
  • No annual fee -- You won’t pay anything just to have a Blue from American Express® account. This card doesn’t charge an annual fee, so it’s a card you can open and keep forever, helping you establish a long record of good credit history without paying a fee each year just to keep the account open and reporting to the credit bureaus.
  • Free ShopRunner membership -- While this isn’t exclusive to Blue from American Express®, it is a rare benefit in the bad credit category. Having the card gets you a free ShopRunner membership, which scores you free two-day shipping on purchases from participating retailers. This perk is valued at $79 per year.
  • Lower credit score requirements -- Blue from American Express® is the least selective card in American Express’s roster, making it a good way to build a relationship with a card issuer that has many other lucrative cards you may qualify for in the future.

Why it's hard to get a credit card with bad credit

The reason it’s hard to get a credit card with bad credit isn’t some grand conspiracy. If you look at credit cards from the card issuer’s perspective, you can begin to see why they’re more selective about people who have bad credit.

The first reason boils down to risk. One thing to remember about most credit cards is that they are unsecured lines of credit, which means they aren’t backed by any kind of collateral. Whereas a bank can repossess your car or home if you don’t make payments on your auto loan or mortgage, there isn’t any collateral backing most credit card loans. As a result, when credit card loans go bad, it often results in a total loss for the card issuer.

The second reason boils down to reward. Banks make money from charging interest on balances and from fees they charge retailers when you use your card. A borrower with bad credit might only be able to qualify for a card with a small credit limit, perhaps $250 or $500. That doesn’t give the bank much room to make much money on interest or fees they charge merchants for accepting the card, but it presents a lot of risk of loss for the bank if the cardholder doesn’t make payments.

Neither of these things make it impossible to get a credit card if you have bad credit. Many card companies have unsecured and secured credit cards (we’ll get to these later) that are designed specifically for people with bad credit.

Card issuers offer these specially-designed cards with the hope that, over time, your credit score will improve, and you’ll remember them when the time comes to open a new savings account or apply for a car loan or mortgage.

How to build your credit score with Blue from American Express®

Building credit with Blue from American Express® is as simple as managing the card so that it reports the best possible view of your activity to the credit bureaus every month. Here’s the three-step guide to building credit with this credit card.

  1. Always pay on time -- Yes, it may be obvious, but paying on time is crucial for having good credit. Making payments more than 30 days late will result in derogatory marks on your credit report. Payment history makes up 35% of your credit score, making it the most important component of having good credit.
  2. Keep your balances low -- The balance you have on your card at any point in time can affect your credit score in a big way. Strive to keep your balance at less than 30% of your credit limit to get the best possible score. Credit utilization, or the percentage of your credit limits you are currently using, makes up 30% of your credit score. Keep in mind that your balance is reported once per month, so having an $800 balance on a card with a $1,000 credit limit just for one day can hurt you if that day happens to be the day your balance is reported to the credit bureaus. If you need to make a big purchase with the card, consider logging in shortly thereafter to make a payment to reduce your balance.
  3. Don’t apply for more credit -- Having more credit cards won’t necessarily help you build or rebuild your credit score any faster, but it can increase the risk that you forget to make a late payment or make another credit-damaging mistake. After opening the account, consider taking a year off from new card applications and focus on keeping this card in good standing. Besides, after a year of good credit management, you will probably qualify for better cards than you qualify for right now.

Secured vs. unsecured credit cards

Blue from American Express® is an unsecured credit card, meaning it isn’t backed by any collateral. Applicants who have especially bad credit or low incomes may be declined for the card. If you’re worried about getting declined, consider applying for a secured card, which are credit cards for people who have bad credit.

Secured credit cards are practically designed for people who have bad credit. The best secured credit cards on the market offer a $200 credit limit in exchange for a deposit, which can range from as little as $49 up to $200. The credit card company holds on to the deposit as collateral in case you fail to make payments, in which case it uses the deposit to pay off your balance.

Besides the security deposit, secured credit cards work just like any other credit card. They report to all three major credit bureaus and require timely monthly payments. If you carry a balance from month to month, you’ll incur interest on your balance just as you would with an unsecured card. It’s worth repeating: Even though you must put down a deposit on a secured card, a secured credit card is not a debit card or a prepaid credit card. It is, for all intents and purposes, a real credit card.

The major advantage to secured credit cards is that they are open to just about anyone, regardless of their credit score. Because you must put up a deposit to get the card, there is very little risk that the card issuer will lose money. As a result, even if you have a recent bankruptcy and late payments, you may very well qualify for a secured credit card.

After opening a secured card and making several on-time monthly payments, the card issuer will automatically assess you for “graduation” to an unsecured card. When this happens, the card issuer will return your deposit, turning your card into a true, unsecured credit card. Over time, your credit limit will likely be increased, too. It’s not unreasonable to think that someone who starts with a $200 credit limit on a secured card could end up with a $3,000 limit on an unsecured card in due time.

American Express doesn’t offer secured credit cards but Discover has a great one. It's a compelling choice for people who want to maximize their odds of approval and start rebuilding their credit quickly. Here is a snapshot of Discover's card:

Discover it® Secured

Discover it® Secured

Apply Now
Secure lock icon.

On Discover's Secure Website.

Our Bottom Line

An unmatched leader with a laundry list of perks and focus on reducing pesky fees. It's rare to find such a rich rewards program in this category, even more impressive that there's no annual fee.

What we Like:
  • Low security deposit
  • No annual fee
  • FICO® score for free
  • Bonus cash back
Key Scores:
3.5 5 Perks
5.0 5 Fees
3.5 5 APR
Perks 3.5/5
Fees 5.0/5
APR 3.5/5
  • Annual Fee: $0
  • Regular APR: 24.74% Variable
  • Intro APR: Purchases: N/A Balance Transfers: 10.99%, 6 months
Highlights
  • No Annual Fee, earn cash back, and build your credit with responsible use.
  • It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
  • Establish your credit line by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases every quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases.
  • Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
  • INTRO OFFER: We automatically match all the cash back you've earned at the end of your first year.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
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