Question 1

How unsecured credit cards work

Accepted Answer

"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.

Question 2

What is a secured credit card

Accepted Answer

A secured credit card requires the cardmember to pay a refundable security deposit. 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 though your creditor or lender may consider your score if it is available. People with little to no credit history (or who have run into bad credit) can apply for secured credit cards to help 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.

Question 3

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

Accepted Answer

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. 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, date of birth, and more.

What Is an Unsecured Credit Card?

Key Takeaways

See if You're Pre-Approved

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Good Credit Cards for People with “Bad” Credit

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