What an unsecured credit card is and how it differs from secured cards

An unsecured credit card is a card that does not require you to put down a cash deposit. When you open a secured card, the bank holds your deposit as collateral—typically $200 to $2,500—and your credit limit matches that amount. An unsecured card works differently: the card issuer extends credit based on your credit history, income, and payment record, not on money you've already given them.

The practical difference matters most at the end. With a secured card, you eventually close the account or convert it to unsecured, and the bank returns your deposit. With an unsecured card, there is no deposit to return—you straightforward use the card, pay your bill, and build credit through on-time payments. The card issuer takes on the risk that you won't pay; they manage that risk by charging interest, setting your credit limit, and monitoring your account.

Unsecured cards also tend to offer more features. They may include cash back, travel rewards, purchase protection, or extended warranties. Secured cards rarely offer rewards because the issuer's risk is lower—they already have your money. An unsecured card issuer has more incentive to attract and keep customers.

Key Takeaways

  • Unsecured cards require no deposit and extend credit based on your credit score and income history rather than collateral.
  • You typically need a credit score of 650 or higher to be considered for an unsecured card, though some issuers accept lower scores.
  • Moving from a secured card to an unsecured card usually happens after 12 to 24 months of on-time payments and responsible use.
  • Unsecured cards often come with rewards, cash back, or other benefits that secured cards do not offer.
  • The interest rate on an unsecured card is usually higher than on a secured card because the issuer has more risk.

Who can get an unsecured credit card

Credit card issuers do not publish a single minimum credit score for unsecured cards—it varies by issuer and by the specific card product. Most mainstream unsecured cards target borrowers with a score of 650 or above. Some issuers offer unsecured cards to people with scores in the 600 to 649 range, though the interest rate will be higher and the credit limit lower. A few issuers have products for people rebuilding credit with scores below 600, but these are less common.

Beyond your credit score, issuers look at your income, employment history, and existing debt. They want to see that you earn enough to handle a credit limit and that you are not already carrying too much debt relative to your income. If you have been declined for an unsecured card, it usually means one of three things: your credit score is too low for that particular issuer's standards, your debt-to-income ratio is too high, or you have recent negative marks like late payments or collections.

If you have a secured card and have used it responsibly for 12 to 24 months, you are a strong candidate for an unsecured card. Your payment history on the secured card shows the issuer that you can manage credit, and many issuers will convert your secured card to unsecured or approve you for a separate unsecured product.

How to move from a secured card to an unsecured card

The most direct path is to ask your current secured card issuer whether they offer a conversion or upgrade. Many banks that issue secured cards—including Capital One, Discover, and others—have a process to convert an account from secured to unsecured after you meet certain conditions. These conditions typically include 12 to 24 months of on-time payments, a minimum credit limit (often $500 or more), and sometimes a minimum credit score increase.

To start, log into your online account or call the customer service number on the back of your card. Ask whether your card is may be able to access for conversion and what steps you need to take. Some issuers will review your account automatically and send you an offer; others require you to request a review. If your issuer approves the conversion, they will return your deposit to your bank account within 5 to 10 business days and update your account status.

If your current issuer does not offer conversion, or if you want to explore other options, you can explore for an unsecured card from a different issuer. Your secured card history will help your process because it shows responsible credit use. explore for cards that match your credit profile—if your score is 650 to 700, target issuers known to work with that range rather than premium cards that typically require scores above 750.

What happens to your deposit when you convert

When your secured card converts to unsecured, the bank releases your deposit and sends it back to you. The deposit does not become a credit toward your balance or a statement credit—it is returned as cash to the bank account you provided when you opened the card. The timing varies by issuer, but most return deposits within 5 to 10 business days after the conversion is complete.

You should verify the bank account information on file before requesting conversion. If the account has closed or changed, contact the issuer to update it so the deposit goes to the right place. Some issuers allow you to specify a different account at the time of conversion.

After conversion, your credit limit may stay the same, increase, or decrease depending on your credit profile and payment history. The issuer will tell you the new limit before the conversion is final. Your interest rate may also change—unsecured cards often carry higher rates than secured cards, so read the terms carefully.

Interest rates and fees on unsecured cards

Unsecured cards typically charge higher interest rates than secured cards because the issuer has more risk. A secured card might charge 18% to 24% APR, while an unsecured card for someone with fair credit might charge 22% to 29% APR. The exact rate depends on your credit score, income, and the issuer's pricing.

Annual fees vary widely. Many unsecured cards charge no annual fee, especially if you are moving from a secured card with your current issuer. Some charge $39 to $95 per year. Premium unsecured cards with rewards programs may charge $95 to $450 annually, but these typically require a higher credit score and income.

Other fees to watch for include late payment fees (typically $25 to $40), over-limit fees (if your issuer allows you to exceed your credit limit), and foreign transaction fees (usually 1% to 3% if you use the card outside the United States). Read the card's terms and conditions before you accept the offer so you know what you are signing up for.

Building credit with an unsecured card

An unsecured card helps your credit score in the same ways a secured card does, but often faster because issuers report unsecured accounts more actively to credit bureaus. Your payment history (35% of your score) improves with every on-time payment. Your credit utilization ratio (30% of your score) improves when you keep your balance low relative to your limit—ideally below 30% of your available credit.

The age of your accounts (15% of your score) benefits from keeping the card open long-term, even after you have paid it off. Closing an old account can hurt your score because it reduces the average age of your accounts. If you convert a secured card to unsecured, the account age carries over, which is another reason conversion is often better than opening a brand-new card.

To maximize credit-building, use the card for small purchases you would make anyway, pay the full balance each month to avoid interest, and never miss a payment. This approach shows lenders that you can handle credit responsibly without taking on debt.

Alternatives if you are not ready for unsecured yet

If you have applied for an unsecured card and been declined, you have several options. You can continue using your secured card and reapply in 6 to 12 months after your credit score improves. You can also explore for a different unsecured card from an issuer with lower credit score requirements—some issuers are more flexible than others.

Another option is to become an authorized user on someone else's credit card account. If that person has good payment history and low utilization, their account activity will show up on your credit report and may help your score. This does not require you to explore for credit yourself.

You can also focus on other ways to build credit while you wait: pay all bills on time, reduce existing debt, and check your credit report for errors that might be dragging down your score. You can get a free credit report from each of the three bureaus—Equifax, Experian, and TransUnion—once per year at annualcreditreport.com.

Frequently Asked Questions

Can I use a secured card and an unsecured card at the same time?

Yes. Many people keep both while they are building credit. The secured card may have a lower interest rate and no annual fee, making it useful for everyday purchases. The unsecured card can be used for specific purchases or rewards. Having both shows lenders you can manage multiple accounts responsibly, which helps your credit score.

What if my unsecured card process is denied?

Ask the issuer for the reason. Common reasons include a credit score below their minimum, high debt-to-income ratio, or recent negative marks. You can request reconsideration if you believe the decision was based on incomplete information. Otherwise, wait 6 to 12 months, continue making on-time payments on your secured card, and explore again.

Will converting my secured card hurt my credit score?

Conversion typically does not hurt your score. Your account age stays the same, your payment history remains intact, and you are not opening a new account. Your score might dip slightly if the issuer does a hard inquiry, but this effect is temporary and small.

Do I have to convert with my current issuer, or can I explore elsewhere?

You can do either. Converting with your current issuer is often easier because they already know your payment history. But you can also explore for unsecured cards from other issuers—your secured card history will help your process even if you switch banks.

What credit score do I need for an unsecured card with rewards?

Unsecured cards with cash back or travel rewards typically require a credit score of 700 or higher. Cards with premium rewards and benefits may require 750 or above. If your score is below 700, focus on cards designed for fair credit first, then upgrade to rewards cards once your score improves.