Getting a credit card
Using your credit card
Credit card rewards
Explore credit cards
See if you're pre-approved > , Opens new tab

Getting a credit card

What Is an Unsecured Credit Card? contents
See if you're pre-approved > , Opens new tab
A young man stands in stairwell holding paper coffee cup and scans his mobile phone.

What Is an Unsecured Credit Card?

Last Updated: November 14, 2024
4 min read
Getting a credit card

Table of contents

Key Points:

  1. Unsecured credit cards are the most common type of credit card.

  2. Unlike secured credit cards, unsecured cards don’t require a security deposit.

  3. To qualify for an unsecured credit card, you usually need to have some credit history.

Unsecured credit cards are the most common type of credit card. In fact, most of the time, when people apply for a new credit card, they’re applying for unsecured credit. It’s what most people consider a regular, or traditional, credit card.

But what does an unsecured credit card mean? Consider some basic information to help you understand what an unsecured credit card is and how it works.

How unsecured credit cards work

“Unsecured” in the case of credit cards means that the lender isn’t securing your debt with collateral, such as a deposit that the lender or card issuer can keep if you fail to make payments.

 

Unsecured debt is typically riskier for lenders. Because of this risk, the terms of an unsecured credit card are based on the borrower’s credit rating, ability to pay, application information, and other factors.

Examples of “secured” debt may be car loans or mortgage loans, which are “secured”, or backed by collateral—a house or a car. Collateral helps ensure that the lender can get some of their money back in the event of nonpayment. Unsecured credit card debt has no such requirement.

What is a secured credit card

A secured credit card requires the cardmember to pay a refundable security deposit. Your deposit usually equals your credit limit (or credit line). This protects the lender if the borrower defaults on their loan. As stated above, unsecured credit cards do not require a security deposit.

You may not even need a credit score to apply for a secured credit card. For example, there’s no credit score required to apply for a Discover it® Secured Card.1

People with little to no credit history (or who have run into bad credit) can apply for secured credit cards as a path to financial freedom. For some credit card companies, after several on-time payments, secured cardmembers may get their deposit back and upgrade to an unsecured credit card.

Unsecured credit card interest rates

As part of your credit card agreement, you promise to repay the money you borrow against your credit limit. In addition, you agree to pay interest on the debt (unless you pay your full balance each month by the due date). Credit cards tend to have higher interest rates than car loans or mortgages, partly because credit card debt is riskier for banks.

Borrowers who have a good credit score are typically less risky for banks to lend to. Credit card issuers tend to offer these borrowers a lower interest rate, or annual percentage rate (APR). The same credit card company may offer different APRs to applicants based on their credit history and other factors.

What do you need to apply for an unsecured credit card?

An unsecured credit card may require a higher income level and credit score than a secured card. The exact requirements can vary by credit card issuer, but if you get turned down for an unsecured card, you can apply for a secured card and work on building or rebuilding credit until you qualify for an unsecured card.

See if you're pre-approved

With no harm to your credit score2

Check Now ➔

While the requirements for approval vary by credit card company, you must be 18 years old to apply for your own credit card in the United States. And if you're under 21, you'll usually need to show the credit card issuer that you have your own source of income. In addition to some financial information, you'll need to provide personal information as well, like your name, Social Security number, date of birth, and more.

Alternatives to unsecured credit cards

Although unsecured cards are the most common form of credit cards, not everyone can qualify for this type of card. If you have limited credit history or are rebuilding credit, you might want to consider a secured credit card. A secured credit card may give you the ability to borrow only a small amount of money, for which you pay a security deposit up front that typically equals your credit line.

Over time, as you pay your bills and use your new secured credit card and other loans responsibly, you may rebuild your credit and get to the point where you’re ready to move on (or “graduate”) to an unsecured credit card.

Did you know?

If you use your Discover it® Secured Card responsibly, you can get your deposit back after six consecutive months of on-time payments and maintaining good status on all your credit accounts.3

Learn More
Important Information >
Inward Curve
Discover credit cards

See if you’re Pre-approved before you apply

Check Now

Next steps

Application Icon
See if you're pre-approved
Check Now
Card Icon
View all Discover credit cards

See rates, rewards and other info

Learn More

You may also be interested in

Share article

Was this article helpful?

Glad you found this useful. Could you let us know what you found helpful?
Sorry this article didn't help you. Can you give us feedback why?

Was this article helpful?

Thank you for your feedback

Apply Now

  1. No Credit Score Required (Secured Card): Based on 2023 Discover it Secured credit card application data, applicants without a credit score may qualify. You must meet other applicable underwriting criteria. When we evaluate your creditworthiness, we consider all the information you provide on your application, your credit report, and other information. If you have a credit score, we may use that in our evaluation.

  2. There is no hard inquiry to your credit report to check if you’re pre-approved. If you’re pre-approved, and you move forward with submitting an application for the credit card, it will result in a hard inquiry which may impact your credit score. Receiving a pre-approval offer does not guarantee approval. Applicants applying without a social security number are not eligible to receive pre-approval offers. Card applicants cannot be pre-approved for the NHL Discover Card.

  3. Graduation Transparency (Secured Card): Monthly reviews start your seventh month as a customer. We will refund your security deposit if you have made all payments on time for the last six consecutive billing cycles on all your Discover accounts including any loans, and you've remained in “good status” on all credit accounts you are responsible for whether they are Discover accounts or not. “Good status” means: (1) your credit report shows no delinquencies, charge-offs, repossessions, or bankruptcies for the six months prior to our review; and (2) your Discover Secured Card is not in a prohibited status at the time of our review, including, but not limited to: closed, revoked, suspended, subject to tax levy, garnishment, deceased, lost/stolen, or fraud. Monthly reviews may be delayed if you change your payment due date. We typically process your refund in 2-3 business days based on your delivery preference. If you close your account and pay in full, we’ll return your deposit within two billing cycles plus ten days.

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.