More Bad-Credit Borrowers Are Getting Cards. At What Cost?

More credit card accounts are being opened for Americans with damaged credit, but those new accounts may come with costly strings attached.

New TransUnion data shows that subprime bankcard originations jumped 14.1% year over year, nearly matching growth among consumers with the strongest credit.

For borrowers struggling with rising everyday costs, a new card can offer some breathing room. But low credit limits, high interest rates, and fees can quickly turn a temporary lifeline into yet another financial burden.

TransUnion released its Q2 2026 Credit Industry Insights Report earlier this month. Despite challenging economic conditions, the number of credit cards and total balances both increased year over year in the second quarter.

And for consumers whose credit has seen better days, one finding stands out: Card issuers appear to be opening the door to more borrowers across the credit spectrum.

Michele Raneri, Vice President and Head of U.S. Research and Consulting at TransUnion, told media outlet Marketplace that lenders may not be putting high credit limits on new cards for subprime borrowers.

Even a modest new credit line can make a difference when the cost of everyday necessities remains high.

Drivers were paying a national average of about $4.06 for a gallon of regular gasoline on Aug. 17 — approximately 93 cents more than they paid one year earlier, AAA data shows. Grocery prices are also continuing to squeeze household budgets.

“Now we’re seeing that even people who have a 550 credit score, which is pretty low, are getting credit cards,” Raneri said. “The costs are just higher, and so that extension of credit, I think, reflects that they’re needing this for their cash flow in order to get through the month.”

Subprime Card Originations Are Surging

Data from TransUnion’s latest credit industry report shows that bankcard originations grew by 11.8% in the first quarter of 2026 compared with the same period a year earlier. Because originations are reported with a one-quarter lag, the latest figures cover the first quarter rather than the second.

The credit bureau said it was the sixth consecutive quarter with growth in originations. But what’s fueling that increase may come as a surprise.

Recent growth was led by consumers at opposite ends of the credit spectrum. Super prime originations increased 15% year over year, while subprime originations didn’t lag far behind, posting a 14.1% gain.

Paul Siegfried, Senior Vice President and Credit Card Business Leader at TransUnion, said in a post on the company’s website that the bankcard market is experiencing a new phase of growth.

“After more than a year of tightening, card issuers are expanding access across the credit spectrum, reflecting a larger non-prime borrower population,” Siegfried said. “Lenders appear increasingly comfortable pursuing growth opportunities while maintaining a disciplined approach to risk management.”

Consumers are also carrying more credit card debt. Total balances climbed to $1.14 trillion in the second quarter, up from $1.09 trillion a year earlier.

The Wrong Card Could Cost You

For consumers who’ve been waiting on the sidelines — whether voluntarily or not — to apply for a new card, the TransUnion findings may offer some encouragement. But broader access does not guarantee approval for every applicant.

Subprime borrowers should also familiarize themselves with what to look for when searching for a new card. The easiest card to get may not be the best one for a borrower with bad credit.

After all, a new card can provide short-term borrowing capacity. But using it to cover essential expenses can cause a borrower’s financial situation to go from bad to worse through mounting interest and fees. To avoid that scenario, subprime borrowers can narrow their search to cards with low fees.

“Even people who have a 550 credit score… are getting credit cards.” — Michele Raneri, TransUnion

Consumers should be especially mindful of recurring charges, such as annual or monthly fees. Although these fees may be relatively small, they can add up to a much bigger expense over time.

According to another credit bureau, Experian, most cards intended for consumers who are seeking to rebuild their credit — or build it for the first time — don’t come with setup charges or monthly maintenance fees.

Borrowers who expect to carry a balance at times should also search for a card with a manageable interest rate. Even a relatively small balance can become difficult to repay when paired with an especially high APR.

People in the market for a card that helps them rebuild their credit will likely want one whose issuer reports on-time payments to all three major credit bureaus.

Also, never skip the fine print. Though combing through card disclosures can be tedious, it can help borrowers avoid unexpected fees and unfavorable terms.