Unsecured cards exist for people rebuilding credit, but they come with real trade-offs
An unsecured credit card for bad credit is a regular credit card — one that does not require a cash deposit — issued to someone with a low credit score or limited credit history. The card issuer takes the risk that you will not pay, rather than holding your money as collateral the way a secured card does. Because that risk is higher, unsecured cards marketed to people with bad credit charge higher interest rates, lower credit limits, and often annual fees. They work like any other credit card: you charge purchases, receive a statement, and pay a balance.
The catch is that most unsecured cards for bad credit are harder to find than secured cards, and the ones that exist often have terms that make them expensive to use. Some people with bad credit have better luck getting approved for a secured card first, building a payment history for six to twelve months, and then moving to an unsecured card later. Others find an unsecured card right away if they have a co-signer or if a specific issuer works with their credit profile.
Key Takeaways
- Unsecured cards for bad credit typically charge annual percentage rates (APRs) between 24% and 36%, compared to 15% to 25% for people with good credit.
- Many unsecured cards marketed to bad credit carry annual fees of $25 to $99, which secured cards usually do not.
- Credit limits on unsecured cards for bad credit are often $300 to $500, making them useful for building history but not for large purchases.
- Approval depends on the issuer's criteria, and some banks will not issue unsecured cards to anyone below a certain credit score, regardless of other factors.
How unsecured cards differ from secured cards
A secured card requires you to deposit cash upfront; that deposit becomes your credit limit, and the issuer holds it as collateral. An unsecured card does not. The issuer approves you based on your credit report, income, and payment history — not on money you put down. If you default, the issuer loses the balance you owe; they cannot take your deposit because there is no deposit.
Because unsecured cards carry more risk for the issuer, the terms are stricter. Interest rates are higher, annual fees are common, and credit limits start lower. A secured card might charge 18% APR with no annual fee and a $500 limit. An unsecured card for bad credit might charge 28% APR, include a $49 annual fee, and offer a $300 limit. Over time, if you pay on time, you may be able to move to a secured card with better terms, or graduate to a standard unsecured card with lower rates.
Interest rates and fees you will encounter
Unsecured cards for bad credit typically charge APRs in the 24% to 36% range, though some go higher. This means if you carry a $500 balance for a full year without paying it down, you will owe roughly $120 to $180 in interest alone. The APR applies only to balances you do not pay in full by the due date; if you pay your full statement balance each month, you pay no interest.
Annual fees range from $25 to $99 on most unsecured cards for bad credit. Some cards charge no annual fee but make up for it with a higher APR. A few charge both a moderate annual fee and a high APR. When comparing cards, add the annual fee to the APR to see the true cost. A card with a $49 annual fee and 26% APR is often a better deal than one with no annual fee and 35% APR, especially if you plan to keep the card open for several years.
Other fees to watch for include late payment fees (typically $25 to $35), over-limit fees if you exceed your credit limit, and foreign transaction fees if you use the card abroad. Some cards charge a fee just to set up an account or to process a payment by phone.
Who actually gets approved for unsecured cards
Approval for an unsecured card depends on the issuer's underwriting rules, which vary widely. Some banks will not issue unsecured cards to anyone with a credit score below 600 or 650. Others have no stated minimum but use a combination of factors: your current score, the reason your score is low, how long ago negative marks appeared on your report, your income, and your debt-to-income ratio.
If you have recent late payments or a recent bankruptcy, approval is less likely. If your low score comes from high credit utilization (using most of your available credit) but your payment history is clean, you have a better chance. Some issuers weight recent positive activity — on-time payments in the last few months — more heavily than older damage.
Having a co-signer can improve your odds. A co-signer is someone with better credit who agrees to pay the balance if you do not. Not all issuers offer co-signed cards, but those that do may approve you with a co-signer when they would decline you alone. Keep in mind that the co-signer's credit is at stake; if you miss a payment, it affects their score too.
When an unsecured card makes sense versus a secured card
Choose an unsecured card if you can get approved and the terms are reasonable. You avoid the hassle of depositing cash upfront, and you do not have to wait for the issuer to convert your account later. However, if the only unsecured cards you can find charge 35% APR plus a $99 annual fee, a secured card with 18% APR and no annual fee is the smarter move, even though it requires a deposit.
A secured card is also better if you want to build credit quickly and predictably. Secured cards are easier to get approved for, so you can start using one when ready. After six to twelve months of on-time payments, many issuers will convert your secured card to an unsecured card or let you move to a better unsecured card elsewhere. This path often costs less in interest and fees than trying to get an unsecured card right away and paying high rates while you rebuild.
An unsecured card makes sense if you have a specific reason to prefer it — for example, if you want to avoid tying up cash in a deposit, or if you have already been using a secured card and are ready to move up. It also makes sense if you find an issuer that offers unsecured cards to people with your credit profile at reasonable rates.
How to find unsecured card offers
Start by checking your own bank or credit union. Many will issue unsecured cards to existing customers with bad credit, even if they would not to a stranger. Call the customer service number on the back of your debit card and ask whether they offer unsecured credit cards for people rebuilding credit.
Search online for "unsecured credit cards bad credit" and compare offers from multiple issuers. Read the terms carefully: look for the APR, annual fee, credit limit, and any other charges. Avoid sites that promise may provide approval or claim to remove negative marks from your credit report — those are red flags for scams.
Credit card comparison sites like NerdWallet, The Points Guy, and Bankrate let you filter by credit score range and see which cards are most likely to approve you. These sites do not may provide approval, but they show you which issuers actively market to people with bad credit. explore only to cards you actually want; each process creates a hard inquiry on your credit report, which temporarily lowers your score.
What happens after you get approved
Once approved, use the card responsibly to rebuild your credit. Pay at least the minimum payment on time every month — late payments damage your score and trigger fees. Ideally, pay your full statement balance each month so you avoid interest charges. If you cannot pay the full balance, pay as much as you can and keep your utilization (the percentage of your credit limit you are using) below 30%.
After six to twelve months of on-time payments, your credit score will begin to improve. At that point, you may receive offers for better unsecured cards with lower APRs and no annual fee. You can also contact your current issuer and ask whether they will lower your APR or remove the annual fee based on your payment history. Some will; others will not.
Do not close the card once you move to a better one. Closing it reduces your available credit and can lower your score. Instead, keep it open and use it occasionally for a small purchase, then pay it off. This keeps the account active and continues to help your credit history.
Frequently Asked Questions
Can I get an unsecured card if I have been denied before?
Yes. Denials do not permanently block you. If you were denied six months ago, your credit score may have improved since then, or you may find a different issuer with less strict criteria. Wait at least a few months between applications to avoid multiple hard inquiries in a short time, which can hurt your score further.
What is the difference between an unsecured card and a prepaid card?
An unsecured credit card is a loan: you charge purchases and pay them back later, building credit history as you do. A prepaid card is not a loan; you load money onto it first, then spend that money. Prepaid cards do not build credit because they do not report to credit bureaus. For rebuilding credit, an unsecured card is better.
Will an unsecured card hurt my credit score when I explore?
The process itself creates a hard inquiry, which temporarily lowers your score by a few points. However, once approved and used responsibly, the card will help your score by adding to your credit mix and giving you a record of on-time payments. The temporary dip is worth it if you use the card well.
Can I use an unsecured card to pay off other debts?
Technically yes, but it is usually not a good idea. Unsecured cards for bad credit charge very high interest rates, so transferring a balance from another card or taking a cash advance will be expensive. It is better to pay down existing debt first, then use the unsecured card for small new purchases only.