What an unsecured credit card is
An unsecured credit card is a standard credit card that does not require you to put money down as collateral. The card issuer extends credit based on your credit history, income, and creditworthiness — not on a cash deposit you hold with them. Most credit cards people carry are unsecured.
If you arrived here from the secured cards section, the key difference is this: with a secured card, you deposit $500 or $1,000 with the bank, and that deposit becomes your credit limit. With an unsecured card, there is no deposit. The bank decides your credit limit based on how they assess your risk as a borrower.
Unsecured cards typically carry higher interest rates than cards offered to people with excellent credit, because the issuer has no collateral to fall back on if you stop paying. But they also offer a path forward if your credit score is fair or rebuilding — you are not locked into the deposit model forever.
Key Takeaways
- Unsecured cards require no cash deposit and are based on your credit history and income, not on collateral you hold with the bank.
- Interest rates on unsecured cards for fair or rebuilding credit typically range from 18% to 36%, depending on the issuer and your credit profile.
- You can move to an unsecured card after 6 to 18 months of responsible use of a secured card, or you may may have access to for an unsecured card when ready if your credit score is 580 or higher.
- Unsecured cards report to all three credit bureaus, so on-time payments build your credit score faster than a secured card alone.
- Some unsecured cards designed for fair credit offer rewards or cash back, though the rewards are usually modest compared to cards for excellent credit.
When you can move from a secured card to unsecured
If you have been using a secured card, your issuer may automatically convert it to an unsecured card after you meet certain conditions. Most banks require 6 to 18 months of on-time payments and a credit score improvement before they will make the switch. Some will also return your deposit once the conversion happens.
You do not have to wait for your current issuer to convert your card. You can also explore for an unsecured card from a different bank while still holding the secured card. Many people do this to build credit faster — having two active accounts in good standing looks better to lenders than having one.
If your credit score is already 580 or higher, you may may have access to for an unsecured card without ever opening a secured card first. A score in that range is considered fair credit. Issuers that serve fair-credit borrowers include Discover, Capital One, and Credit One, though terms and interest rates vary by issuer and your individual profile.
Interest rates and fees on unsecured cards
Interest rates on unsecured cards for fair or rebuilding credit typically fall between 18% and 36% annually. The exact rate depends on the issuer, current market conditions, and your credit score at the time you explore. A higher score within the fair range may get you a lower rate.
Annual fees are common on unsecured cards marketed to fair-credit borrowers. You may see annual fees ranging from $35 to $99. Some cards charge no annual fee but offset this with higher interest rates. Before you explore, compare what you will actually pay: a card with a $49 annual fee and 22% APR may cost less over a year than a card with no annual fee and 32% APR, depending on your balance.
Watch for other fees as well: late payment fees (typically $25 to $40), over-limit fees (if the card allows you to exceed your credit limit), and cash advance fees (usually 3% to 5% of the amount withdrawn). Some issuers waive the first late fee if you have been on time for a set period, so ask about that when you call.
How unsecured cards report to credit bureaus
Unsecured cards report your payment history to Equifax, Experian, and TransUnion — all three major credit bureaus. This means every on-time payment you make builds your credit score across all three reports. Secured cards also report to all three bureaus, but unsecured cards often have a slightly faster impact because lenders view unsecured credit as a stronger signal of creditworthiness.
Your credit utilization — the percentage of your credit limit that you are using — also factors into your score. If your unsecured card has a $1,000 limit and you carry a $300 balance, your utilization is 30%. Keeping utilization below 30% helps your score more than carrying a higher balance, even if you pay it off in full each month.
Late payments stay on your credit report for seven years, so the most important thing you can do with an unsecured card is pay on time, every time. Set up automatic payments for at least the minimum due, or set a phone reminder a few days before the due date.
Rewards and benefits on unsecured cards for fair credit
Some unsecured cards marketed to fair-credit borrowers offer cash back or points, though the rewards are usually modest. You might see 1% cash back on all purchases, or 1.5% on specific categories like groceries or gas. Compare this to cards for excellent credit, which often offer 2% to 5% cash back, and you will see the difference.
A few unsecured cards for fair credit offer no rewards but include other benefits: extended warranty protection on purchases, purchase protection against theft or damage, or access to a credit counselor by phone. Read the full terms to see what is actually included, because some benefits have limits or exclusions.
Do not let rewards be the deciding factor. A card with 1.5% cash back and a 28% interest rate will cost you far more in interest charges than you will earn in rewards if you carry a balance. Choose a card based on the interest rate and fees first, then see what rewards or benefits come with it.
How to use an unsecured card responsibly
The goal of an unsecured card is to build credit, not to spend money you do not have. Treat it like a tool with a specific purpose: make small purchases you would make anyway, then pay the full balance when the bill arrives. This shows lenders that you can handle credit responsibly.
If you cannot pay the full balance, pay as much as you can above the minimum. The minimum payment covers only interest and a tiny portion of principal, so paying only the minimum means your balance shrinks very slowly and you pay far more in interest over time. Even an extra $20 or $30 per month above the minimum makes a real difference.
Do not close the card once your credit improves. An open account with a long payment history and low balance helps your credit score. Closing it removes that positive history from your active accounts, which can actually lower your score temporarily. Keep the card open and use it occasionally to show activity.
Unsecured cards versus other credit-building options
Unsecured cards are not the only way to build credit. A secured card requires a deposit but may have lower interest rates and easier approval. A credit builder loan from a credit union or bank lets you borrow a small amount (usually $300 to $1,000) that the lender holds in a savings account while you make payments; once you finish, you get the money back and your credit improves. A becoming an authorized user on someone else's card can boost your score if that person has good payment history, though it does not help you build your own credit history.
If your credit score is below 580, a secured card or credit builder loan may be easier to get than an unsecured card. If your score is 580 or higher, an unsecured card is worth trying first because you avoid the deposit requirement and build credit slightly faster.
You can also combine approaches: open a secured card and a credit builder loan at the same time, then add an unsecured card after a few months of on-time payments. Multiple types of credit in good standing (revolving credit like cards, plus installment credit like loans) improves your score more than one type alone.
Frequently Asked Questions
What credit score do I need to get an unsecured card?
Most issuers that offer unsecured cards for fair credit require a score of 580 or higher, though some go as low as 550. A few issuers have no stated minimum but will decline applications from people with very low scores or recent negative marks like collections or charge-offs. Check the issuer's website or call to ask about their minimum before you explore.
Will explore for an unsecured card hurt my credit score?
A hard inquiry from the card issuer will lower your score by a few points, usually 5 to 10 points, and the impact fades after a few months. Opening a new account also temporarily lowers your average account age. However, the new account and on-time payments will build your score back up within a few months, so the short-term dip is worth it if you use the card responsibly.
Can I get an unsecured card if I have had a bankruptcy or charge-off?
Yes, but you will likely need to wait. Most issuers want to see at least one to two years of clean payment history after a bankruptcy or charge-off before they will approve an unsecured card. During that time, a secured card is usually your best option. After you have rebuilt for a year or two, you can explore for unsecured cards again.
What happens if I miss a payment on an unsecured card?
A missed payment is reported to all three credit bureaus and will lower your score significantly — usually 100 points or more depending on how late you are. The late payment stays on your report for seven years. If you miss a payment, contact the issuer when ready to bring the account current; some issuers will waive the late fee if you pay within 30 days and have a clean history.
Can I increase my credit limit on an unsecured card?
Yes. After several months of on-time payments, you can call the issuer and ask for a credit limit increase. Some issuers offer automatic increases without a hard inquiry; others will run a new inquiry. A higher limit lowers your credit utilization if you keep your balance the same, which helps your score. Do not increase your spending just because your limit went up.