An unsecured credit card is one where you don't put down a cash deposit to secure the line of credit
An unsecured credit card works like most cards you've probably seen: you borrow money from the card issuer, and the issuer extends credit based on your creditworthiness rather than on collateral you've deposited. The issuer takes on the risk that you won't pay back what you owe. There's no deposit sitting in an account backing your credit limit — the card itself is unsecured.
This is the opposite of a secured card, where you deposit $500 or $1,000 (or another amount) into a savings account, and the issuer gives you a credit limit equal to or slightly less than that deposit. With an unsecured card, you walk in with your credit history, income, and payment record. The issuer looks at those things and decides whether to trust you.
Most credit cards in circulation are unsecured. If you have a card from a major bank or a rewards card, it's almost certainly unsecured. The trade-off is that unsecured cards typically require a stronger credit history to get approved, and the interest rates and fees tend to be higher than what borrowers with excellent credit pay.
Key Takeaways
- Unsecured cards don't require a cash deposit and are approved based on your credit score, income, and payment history.
- Interest rates on unsecured cards are usually higher than on secured cards because the issuer bears all the risk of non-payment.
- You can move from a secured card to an unsecured card once your credit improves, and many secured card issuers will convert your account automatically.
- Unsecured cards report to all three credit bureaus, so on-time payments build your credit history the same way a secured card does.
- Annual percentage rates (APRs) and fees vary widely by issuer and your credit profile, so comparing offers before you apply matters.
How unsecured cards assess your creditworthiness
When you apply for an unsecured card, the issuer pulls your credit report and score to decide whether to approve you and what interest rate to offer. They're looking at how you've managed debt in the past: whether you've paid bills on time, how much debt you're carrying relative to your credit limits, and how long you've had credit accounts open. A score in the 670–739 range (considered "good" by most scoring models) opens doors to unsecured cards with reasonable terms. Below 620, most mainstream issuers will decline you or offer only high-APR cards.
The issuer also looks at your income and current debt obligations. They want to know whether you have the cash flow to make monthly payments. If you're carrying high balances on other cards or have recent late payments, you're a riskier borrower, and the issuer will either decline you or charge a higher APR to compensate for that risk.
This is where unsecured cards differ most from secured cards. A secured card issuer doesn't care much about your credit score because your deposit is collateral — they can take the money if you don't pay. An unsecured issuer has no safety net, so they're stricter about who they approve and what they charge.
Interest rates and fees on unsecured cards
Unsecured cards typically carry higher APRs than secured cards because the issuer is taking on more risk. If you have fair credit (620–669), you might see APRs in the 24–29% range. With good credit (670–739), you could may have access to for 18–24%. With excellent credit (740+), you might get 12–18% or lower, though those best rates usually go to people with longer credit histories and higher incomes.
Annual fees vary. Some unsecured cards charge $0; others charge $39, $95, or more per year. Cards marketed to people rebuilding credit often charge annual fees because the issuer expects higher default rates and needs to offset that cost. Cards aimed at people with good or excellent credit are more likely to be fee-free, especially if they offer rewards.
Late fees, over-limit fees, and returned-payment fees also apply. Late fees typically run $25–$40 for a first late payment and $35–$40 for subsequent ones. Over-limit fees (charged if you exceed your credit limit) have become less common since 2010, but some issuers still allow them if you opt in. Returned-payment fees apply if a check or automatic payment bounces.
When you can move from a secured card to unsecured
Many people start with a secured card to build or rebuild credit, then graduate to an unsecured card once their score improves. There's no fixed timeline — it depends on how consistently you pay on time and how much your score rises. Some people move within 6–12 months; others take 18–24 months. The key is demonstrating a pattern of on-time payments and keeping your balance low relative to your credit limit.
Some secured card issuers will automatically convert your account to unsecured once you meet their criteria. They'll review your account periodically and, if your payment history is clean and your score has improved, they'll upgrade you without you having to apply. They'll also return your deposit to you. Check your card's terms to see whether automatic conversion is offered.
If your issuer doesn't offer automatic conversion, you can apply for an unsecured card from another issuer once you feel ready. You don't have to close the secured card — keeping it open helps your credit history length and your credit utilization ratio. Just make sure you're not applying for multiple cards in a short window, because each application triggers a hard inquiry on your credit report, and multiple inquiries can temporarily lower your score.
How unsecured cards report to credit bureaus
Unsecured cards report your account activity to Equifax, Experian, and TransUnion — the three major credit bureaus — just as secured cards do. Every month, the issuer reports your credit limit, current balance, payment status, and any late payments. This information feeds into your credit score calculation.
On-time payments are the single biggest factor in your score (35% of the calculation). Keeping your balance below 30% of your credit limit helps too (that's the utilization ratio, worth 30% of your score). The longer you hold the account and make on-time payments, the more your score improves. An unsecured card builds your credit history at the same rate as a secured card — the difference is that you had to may have access to for it based on your existing credit, rather than on a deposit.
Late payments stay on your report for seven years, so it's critical to pay at least the minimum by the due date. Even one 30-day late payment can drop your score by 100 points or more, depending on your current score and history. Missing payments also triggers collection calls and can lead to a lawsuit if the debt goes unpaid long enough.
Comparing unsecured card offers before you apply
Because APRs and fees vary widely, comparing offers saves you money. Look at the APR range the issuer advertises — this tells you the spread they might offer based on creditworthiness. If you have fair credit, you'll likely land at the higher end of that range. If you have good credit, you'll be closer to the middle or lower end.
Check the annual fee, late fees, and any other charges. Some cards waive the annual fee for the first year, so factor that in. Look at what happens after an introductory period ends — some cards offer 0% APR for 6–12 months on purchases or balance transfers, then jump to a standard APR. Understand when that switch happens and what the regular APR will be.
Also consider the credit limit. Unsecured cards typically start you with a lower limit than you might get later — often $300–$1,000 depending on your credit profile. As you demonstrate responsible use, the issuer may increase your limit without a hard inquiry. Some issuers allow you to request a limit increase after a few months of on-time payments.
The difference between unsecured and secured cards in practice
The main practical difference is approval and cost. A secured card is easier to get approved for because your deposit removes the issuer's risk. An unsecured card requires stronger credit but doesn't tie up your cash. If you have $500 to put toward credit building, a secured card lets you use that $500 as collateral and keep it in a savings account (earning minimal interest). An unsecured card lets you keep that $500 in your pocket, but you need a credit score and history strong enough to may have access to.
Over time, both cards build your credit the same way: through on-time payments and low utilization. The difference is that an unsecured card usually costs more in interest and fees because the issuer is taking on more risk. If you can may have access to for an unsecured card and the APR is reasonable (under 25%), it might make sense to skip the secured card altogether. If your credit is weaker, a secured card is often the faster, cheaper path to building history.
Frequently Asked Questions
What credit score do I need to get an unsecured card?
Most mainstream issuers want a score of at least 620–650, though some will work with scores as low as 600. Scores below 600 typically may have access to only for high-APR cards or secured cards. The higher your score, the better the APR and terms you'll be offered.
Can I get an unsecured card if I have no credit history?
It's difficult but not impossible. If you have no credit history, you have no score to pull, so issuers can't assess your creditworthiness. A secured card is the standard first step. After 6–12 months of on-time payments on a secured card, you'll have enough history to may have access to for an unsecured card.
What happens if I don't pay my unsecured card balance?
The issuer will charge late fees, your interest rate may increase, and the debt will be reported to the credit bureaus. After 180 days of non-payment, the issuer typically charges off the account and may sell the debt to a collection agency. The collection account stays on your credit report for seven years and severely damages your credit score.
Do I have to close my secured card once I get an unsecured card?
No. Keeping the secured card open helps your credit history length and lowers your overall credit utilization ratio. Just stop using it if you want, or use it occasionally to keep the account active. Closing it would remove that history from your active accounts and could lower your score.
Can the issuer raise my APR on an unsecured card after I'm approved?
Yes, but only under certain conditions. If you miss a payment, the issuer can apply a penalty APR, which is usually higher than your standard rate. They can also raise your rate if your credit score drops significantly or if you miss payments on other accounts. They must give you 45 days' notice before the increase takes effect, and you have the right to reject it and close the account.