Best Credit Cards After Bankruptcy for 2024

When you're recovering after filing bankruptcy, opening a credit card is an important part of rebuilding your credit. The best credit cards after bankruptcy are easy to get, keep fees to a minimum, and report monthly activity to the major credit bureaus.

Although there are many credit card offers available to consumers who have filed bankruptcy, good options that don't bury you in fees are hard to find. We've compared bankruptcy credit card options to find the best ones.

How soon after filing bankruptcy can you get a credit card?

You can apply for a credit card after your bankruptcy is discharged (when the bankruptcy has ended and the court has released you from liability for your debts). If proceedings are still in progress, then you need the approval of the bankruptcy court to apply for a card.

The amount of time you need to wait will depend on the type of bankruptcy you filed. Here's how long it usually takes before you can apply for a credit card after Chapter 7 and Chapter 13 bankruptcy:

A Chapter 7 bankruptcy requires bankruptcy filers to liquidate assets, and it's a relatively short process. Once you've sold the assets you're required to sell, any debts that couldn't be repaid will be discharged. This type of bankruptcy generally takes four to six months to discharge after the bankruptcy filing.

A Chapter 13 bankruptcy discharge takes much longer because it requires the debtor to follow a three- to five-year repayment plan. You can only apply for a credit card during a Chapter 13 repayment plan if you have the approval of the trustee. Even if you do, the credit card company may deny your application since you're still in the bankruptcy process.

How to pick the best credit card after bankruptcy

Choosing a new credit card after bankruptcy is an important decision to get right. The goal is to find a quality card from a reputable card issuer that you can use to build credit. Here are a few tips you can follow to make this easier.

1. Get your credit score and credit report

You're already aware your credit score took a hit, but you should still know where it stands currently. This will play a part in the credit cards you qualify for. If you're looking for a free place to check your credit, Experian offers a free tool that provides your FICO® Score (the most widely used type of credit score by lenders).

Also pull your credit report from each credit bureau: Equifax, Experian, and TransUnion. Review them for any errors on your credit history that could be affecting your credit score. Your credit report will also tell you exactly when your bankruptcy was reported.

2. See if you're prequalified for any credit cards

Many credit card issuers have an online prequalification tool. After you fill out a form with some basic information, this tool lets you know if you're prequalified for any of that issuer's credit cards. That's not a sure thing, as the card issuer still needs to run a full credit check. But it means you have solid odds of getting approved for a credit card.

RELATED: How to Get Pre-Approved for Discover Credit Cards

3. Shop around for credit card options

See what credit cards fitting your situation are available from major banks, your local credit union, and any other credit card issuers you find. After bankruptcy, credit cards for bad credit are a good place to start. These are intended for consumers with lower credit scores. Card issuers often have a section with cards designed for building credit and rebuilding credit on their websites.

Another option for bad credit is secured credit cards. This type of card requires a security deposit upfront, so card issuers are more lenient on the applicants they approve because they won't need to worry about unsecured debt. With a typical secured card, the minimum security deposit is $200, but there are a few that have lower minimums. The amount of the security deposit is often equal to your card's starting credit limit.

4. Review the card issuer's rules on bankruptcies

Credit card companies all have their own restrictions on applicants with bankruptcies, and you can often find this information in the terms and conditions for their cards. If you're considering applying for a credit card, search the terms and conditions for "bankruptcy" to see if there are any rules that would lead to a denial.

For example, Capital One won't approve any applicant with a non-discharged bankruptcy. So, while it has some of the best credit cards after Chapter 7 bankruptcy, you wouldn't want to apply if you're in the middle of a Chapter 13 repayment plan.

Citi is another example, as it won't approve applicants with any bankruptcy history in the last two years.

5. Focus on fees

As you compare credit cards, the No. 1 factor to look out for is fees. Specifically, it's the unavoidable fees that are problematic, such as a monthly or an annual fee. Late fees, cash advance fees, balance transfer fees, and other fees of this nature aren't a deal breaker, because those are all charges you can avoid.

What about the interest rate? A card's annual percentage rate (APR) isn't an issue if you always pay off your card's full balance, because in that case, you won't be charged interest. When you're not getting charged interest, you don't need to worry about interest rates.

The best credit cards after Chapter 7 and Chapter 13 bankruptcy are ones that charge inexpensive or preferably zero maintenance fees.

How to use a credit card after bankruptcy

If you follow good habits with your credit card, that card activity can help you rebuild your credit. Here's exactly how to use a credit card after bankruptcy so you improve your credit score:

• Make at least one purchase per month. You won't benefit much from a credit card you never use. There needs to be activity the credit card company can report to the major credit bureaus. It doesn't take much -- even a single purchase per month works.
• Only spend what you can afford to pay off. Even though you need to use your card, don't overuse it. Make sure to pay off the full balance every month. This will help you avoid interest charges and stay out of credit card debt. It's also good for your credit utilization ratio, which is your card balance compared to your credit limit. Credit utilization is a major factor in your credit score.
• Pay your credit card bill on time. Payment history is the biggest part of your credit score. Every on-time payment is a positive step for your credit. To avoid a late payment on your credit card account, consider setting up automatic payments or scheduling a monthly reminder in a calendar app.
• Ask the card issuer for an upgrade. Your first new credit card after bankruptcy likely won't have many features or a high credit line, and you may need to pay a security deposit for it. After you've had it for six to 12 months, contact the card issuer to see if you're eligible for an upgrade. Most good credit card companies will eventually let cardholders switch to a card with more features. Or, if you started with a secured card, you could graduate to an unsecured credit card and get your deposit back.

As you recover from bankruptcy, also focus on building financial security. Make a budget so you know how much you can spend each month. Also set up a savings account with an emergency fund and contribute to it regularly.

If you do that, you'll steadily become more financially stable. Plus, as you use your credit card consistently and pay its bills on time, your credit will recover. It takes time, but you'll eventually reach the point where you can qualify for the best credit cards.

Our credit card methodology

At The Motley Fool Ascent, we rate credit cards on a five-star scale (1 = poor, 5 = best). Our rating criteria includes rewards rates, welcome bonuses, fees, and perks like travel credits and 0% intro APR offers to evaluate our ratings.

Our highest-rated credit cards have:

• A rewards rate above 2% (or 2x points or miles) with average spending, or competitive 0% intro APR balance transfer and purchase offers
• Attainable welcome bonuses that make up for any annual fees
• Low annual fees or a balance transfer fee of 3%
• Top perks such as purchase and travel protections, no foreign transaction fees, travel credits, and status upgrades

We combine these factors with an evaluation of brand reputation and customer satisfaction to ensure you're getting the best card recommendations. Learn more about how The Ascent rates credit cards.