Unsecured credit cards can be a smart, practical way to build credit or boost your credit score. But not everybody qualifies for traditional cards.
That’s why some cards are specially built for users with credit scores at 640 or below. They often come with higher interest rates and lower credit limits. But most offer opportunities to raise your credit limit, and lower your interest rate, based on responsible use.
These credit-building cards can be especially helpful in emergencies, providing access to spending when other credit lines aren’t available.
Some offer only bare-bones reward programs, where you can typically earn about 1% cash back on some everyday purchases. But most offer monthly reporting to credit bureaus and automatically review your account every six months to see if you’re eligible for a higher limit.
Unsecured cards designed for rebuilding credit can be a game-changer. Just be sure to compare terms, credit limits, annual fees and APRs.
Here are five popular unsecured cards for users looking to build their credit:
1. Capital One Platinum Visa for Rebuilding Credit
Here’s a credit-building card with a $300 initial spending limit – with no security deposit required. Minimum credit scores vary between Capital One credit cards, and while they don’t promote a score for this one, you can check to see if you qualify without damage to your credit score. There’s an annual of $75 the first year and $99 each year after.
2. Milestone Mastercard
The Milestone Mastercard also offers an initial $300 credit limit with no security deposit, and its first-year annual fee ranges from $35 to $75, a little lower than Capital One. You can also pre-qualify without damaging your credit score.
3. Surge Mastercard
Surge offers a higher initial credit limit than others, ranging from $300 – $1,000 depending on your score. Like the others, you can check if you qualify without damaging your score, and while no minimum score is promoted, “all credit types welcome to apply.”
4. Indigo Mastercard Unsecured Credit Card
Indigo offers similar terms and rates, with a comparable $300 initial credit limit, but they’re more accepting of troubled credit history, even if you’ve filed for bankruptcy before. Like other cards targeting credit-builders, it’s another way to build an on-time payment history, which can help build your score month after month.
5. Revvi Visa Card
Revvi’s APRs can be much higher than others, but the card offers 1% cash back rewards (with restrictions). Like others, the initial credit limit is $300, and you can prequalify without dinging your score. But the chance to request a higher limit is a little less frequent, available every twelve months (instead of six) with a fee charged too.
What Is an Unsecured Card?
Unsecured credit cards come in all shapes and sizes, with different credit scores and qualifying terms. But an upfront deposit is not required (unlike secured cards) and your credit limit is “revolving,” which means you don’t have to use it all at once, and it’s always available to you, even if you don’t use it every month.
From credit-building cards, such as the ones on our list, to the most luxurious travel rewards cards, unsecured credit cards cover a wide variety of needs. You may get a lot of spending power and even save money with these cards, but use them responsibly to avoid incurring high-interest charges.
Secured Cards vs. Unsecured Cards
Secured credit cards are defined by a security deposit, which you’ll use to open the account, with your card issuer providing a credit limit equal to the same amount. Many allow you to deposit additional money over time in order to boost your credit limit, and when you close the account and pay off the outstanding balance, you’ll get the deposit returned in full.
In contrast, an unsecured card doesn’t require a deposit up front, and your credit limit is determined by your income and credit history. Secured credit cards are often issued regardless of your creditworthiness and based only on the size of your security deposit.