What is an Unsecured Credit Card and How Can You Get One?

A hand holding a credit card
© Sawayasu Tsuji / E+ / Getty

What is an Unsecured Credit Card?

An unsecured credit card is a credit card that doesn't require you to have a security deposit for the credit limit. You don't have to make a deposit to receive the credit card. You also aren't required to make a deposit to get credit limit increases. Unsecured credit cards are the ones that most consumers are familiar with.

Secured Credit Card vs. an Unsecured Credit Card

Unsecured credit cards aren’t hard to find; the vast majority of credit card issuers offer half dozen or more different unsecured credit cards.

You can know whether a credit card is secured or unsecured by whether it has “secured” in the name. Secured credit cards will always be called something like “Big Bank Secured Card” whereas unsecured credit cards won't have "unsecured" in the name.

Here’s how unsecured and secured credit cards differ.

With an unsecured credit card, the creditor cannot seize your property (or security deposit) if you default on your credit obligation – because you have not secured the credit line with any collateral. Instead, the creditor can only take further collection efforts including referring your account to a third-party debt collector, suing you in court, or asking the court for permission to garnish your wages.

Secured credit cards, by comparison, do require a deposit to as collateral for the credit line. This is required because the cardholder is deemed riskier than other cardholders. If the cardholder defaults on the credit obligation, the creditor has the right to take the security deposit or other collateral to cover the defaulted balance.

Unsecured credit cards are desired over secured credit cards because they don't require a security deposit. And even though you’re paying a security deposit on a secured credit card, you might have to pay an annual fee too without any extra benefits. Unsecured credit cards typically have lower interest rates and offer rewards programs, features that are rare with a secured credit card.

How to Qualify for an Unsecured Credit Card

People with bad credit, no credit, or who’ve recently filed bankruptcy will have the hardest time qualifying for an unsecured credit card. Most creditors see your shaky credit history and are unwilling to take a risk by giving you a credit card. A secured credit card is your best bet for getting your credit back on track and qualifying for a better credit card.

Cardholders who have a secured credit card may be able to convert their cards to an unsecured credit card and get their deposit back by making timely payments for a certain amount of time. The time required to convert to an unsecured credit card varies by credit card issuer but ranges from 12 to 18 months.

You can improve your chances of getting an unsecured credit card by using a secured credit card wisely for at least six months, bringing in enough money, paying off your past due accounts, and reducing your debt.

You may have a relative or friend who is willing to get a joint (unsecured) credit card with you. This will keep you from paying a security deposit and give you a chance to improve your credit score so you can be approved for a credit card on your own.