Credit Cards

Top 10 Unsecured Credit Cards


Top 10 Unsecured Credit Cards 12.09.2019Leave a comment
Top 10 Unsecured Credit Cards

What is an unsecured card?

Unsecured credit cards are the most common type of cards, considering there are only 2 categories secured and unsecured.

It means they are not guaranteed by collateral. Unlike other kinds of loans such as mortgages or auto loans, borrowers are not required to secure their credit cards with property or cash deposits.

Issuers of such type of credit cards use other methods to collect their unpaid debts. Financial institutions may use courts or garnishment in case borrowers fail to repay the credit amount.

If you have a low or fair credit score, you may still qualify for this type of credit cards based on your credit history, monthly earnings, and financial health.

The most important thing in credit history is: :

  • your payment history (35%);
  • amounts you own (30%);
  • your credit history length (15%);
  • the number of types of credits you have (10%)
  • and account inquiries (10%).

Both unsecured and secured credit cards offer their benefits to the users yet differ from each other in many ways. Secured credit means your card is backed by a cash deposit or immovable property which is owned by you.

From lenders’ point of view, secured credit card has less inherent risk. If you are unable to repay the initial disbursed amount and the loan goes default, the lender will have less difficulty of recovering their losses. They will sell the repossessed assets to have liquid cash.

On the other hand, if you have no credit or your score is below average, the lenders will consider you as a risky client. Therefore, they will be less likely to provide an unsecured loan. However, as the banking and finance sector improves a lot of new products get introduced, targeting all clients from no credit to excellent.

As for the unsecured cards, they are generally more costly for users and riskier for lenders. For the borrowers, the costs usually vary based on their credit score. So, if your first unsecured credit card has a very high annual fee and percentage rate, it does not mean you will get the same prices each time you apply for a loan. If all of your payments are on time, the next credit will offer you more advantageous terms and conditions which will be less costly and more efficient.

So, think of unsecured credit cards as an excellent opportunity to build your credit history and improve your credit score. If you can’t decide which type of card suits you best, base your decision why you need a credit card for. If you are thinking about making a considerable purchase such as a house or a car, mortgage loan lenders will most likely require collateral in exchange for the loan.

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Note that in this case, your creditworthiness is not taken into consideration as loans with such high amounts are usually secured. However, if you have bad credit and want to improve your score and history, banks and other financial institutions may offer you unsecured credit cards with special terms and conditions.

As users of unsecured credit cards don’t need to tie their property to the credit, lenders typically base their decision on the credit score of the customer. The requirement for most of the unsecured credit cards are having a credit score of a minimum of 640.

However, if you think getting an unsecured credit card is more comfortable and less risky, you are wrong. These types of cards are usually more costly.

You would be surprised to know that the average annual fee of unsecured credit cards is around $100 and the annual percentage rate is approximately 36%.

Lenders usually charge even higher costs on the borrowers with fair or bad credit scores in exchange for not having an initial deposit or a collateral agreement for the loan.

With unsecured credit cards, lenders may give you an excellent opportunity to earn from 1-1.5% cash backs (discussed in detail below).

With every purchase you make with your unsecured credit card, the lender gives cash backs, which you may redeem after you collect a certain amount.

Students, for example, earn rewards when they get good grades in college and can get an annual fixed amount to their credit account.

Overall, financial institutions develop various reward and bonus programs for many target customers to give them an incentive for building a good credit score.

Many people with fair credit wish to improve their score but can’t receive a loan because of not having enough cash deposits or comparable properties.

With unsecured credit cards, the problem is that you are NOT required to back up your borrowing with a deposit or a property.

Your chances are increased of getting an unsecured credit as the lender does not base their decision on the amount of collateral when deciding your credit limit.

They typically take into consideration factors such as creditworthiness, payment history, etc.

As already mentioned, unsecured credit cards offer products for different target groups; from people having no credit history at all to the ones who have an excellent history and score.

For those who do not have a credit history at all, applying for this type of loan is a great opportunity to start getting your credit history in good shape.

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If you make your monthly payments on time, the terms and conditions of the loan will become more favorable for you with every next loan.

Additionally, note that most of the financial institutions report to credit bureaus, which create your credit history.

Overall, by starting your financial journey with unsecured credit cards may help you build and develop a great credit history!

The unsecured credit cards usually offer annual percentage rates depending on the creditworthiness of the customer. The rate gets lower if the borrower has a good or excellent credit score.

The reason behind it is that lenders consider these customers less risky; thus, they offer them more favorable terms, taking into consideration their previous financial experience.

As for borrowers with bad or fair credit, the rate is high; however, it can be modified if the score is improved over time.

Now that you are familiar with the advantages and requirements you may get while using unsecured credit cards, let’s see the list of them with a detailed overview.

Capital One QuickSilver One

Cardholders of QuickSilver One get cashback rewards of 1.5% on every purchase they make. They also get access to benefits like extended warranty coverage, rental vehicles insurance, travel insurance, etc.

Capital One QuickSilver One
Capital One QuickSilver One

The annual percentage of this card is 26%; however, it varies based on your credit score. The annual fee is $39, and the credit score required for this card is the “fair” category.

Discover It Student Cash Back

This credit card targets students and offers many advantages to them. Discover It Student Cashback cardholders can earn 5% cash backs at different places each quarter.

You can earn bonuses at gas stations, groceries, restaurants, and even websites such as Amazon.com. As the card is for students, the ones whose cumulative GPA is above 3.0 the card will award $20 statement credit each year for up to 5 years.

Discover It Student Cash Back
Discover It Student Cash Back

Other advantages of this card are that it offers a 0% introductory annual percentage rate for six months, after which 15.24% – 24.24% variable annual percentage rate.

The good news is that you can freeze the account whenever you don’t need it or when your card is lost or stolen.

Journey Students Rewards from Capital One

Another credit card designed for students is Journey Students card from Capital One. This card also helps students to build a good credit history and helps manage their finances with great responsibility.

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The card offers unlimited cashback of 1% on all purchases with an opportunity to increase the bonus percentage to 1.25% if all the repayments are made on time.

Journey Students Rewards from Capital One
Journey Students Rewards from Capital One

The card has no annual fee. However, students are charged 26.96% annual percentage rate, which can vary based on the creditworthiness of a borrower.

Citi Double Cash Card

Citibank offers an unsecured credit card called Double cash, which has many benefits for its users.

When you buy something with Citi Double Cash Card, you immediately get a 1% cashback. An additional 1% will be charged back when you pay off your debt on time.

Citi Double Cash Card
Citi Double Cash Card

You are charged a 0% annual percentage rate during the first 18 months after which 15.99-25.99% will be charged based on your credit score.

Milestone Gold Mastercard

If you have fair to good credit score, this credit card is just right for you! The card reports to all the major credit bureaus, so if you are thinking of rebuilding and improving your credit score; you are on the right path.

Milestone Gold Mastercard
Milestone Gold Mastercard

This card offers a fixed annual percentage rate of 24.9%. There are no fixed fees for the account opening and can be variable based on your credit score. The drawback of Milestone Gold Mastercard is that there are no bonus or cash backs while using the card.

Total Visa Card

The Total card is available to people with poor and fair credit scores, to help them improve their credit history. The card application is online and very secure, as well as comfortable. The good thing is that you will get a response to your application within 60 seconds.

Total Visa Card
Total Visa Card

If approved, you will have to pay $89 monthly fee to open your account and access available credit.

Your monthly payments are monitored and reported to all the major credit bureaus. So if you are thinking of improving your current credit score, the card gives you a perfect opportunity for that.

Capital One Spark Classic for Business

The credit required to get this type of card is average and higher. You can earn 1% cashback on every purchase, build business credit with responsible and timely use.

You will have no transaction fees and can enjoy business benefits such as year-end summaries, employee cards at a discount, and experienced consulting services for your business.

Capital One Spark Classic for Business
Capital One Spark Classic for Business

The annual percentage rate on Capital One Spark Classic for Business is 25.24%, which may vary depending on your credit score.

Horizon Gold Card

Horizon Gold card targets customers with bad credit to assist them in building and improving their credit score. However, note that purchasing opportunities with this card are very limited.

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Horizon Gold is a catalog card, and you can only buy items from Horizon outlet website. The best part is that if you have bad credit, you may still qualify for this card and have an annual percentage rate of 0%.

Horizon Gold Card
Horizon Gold Card

However, in terms of the annual fee, this card may not be the best option. You are charged $24.95 monthly, which equals to $299.4 a year.

Indigo Platinum Mastercard

If you have fair credit and are thinking about getting an unsecured credit card, Indigo offers its platinum MasterCard for you.

You may get pre-qualification, which will have no impact on your credit score. Creditors may be charged an annual fee depending on their creditworthiness.

Indigo Platinum Mastercard
Indigo Platinum Mastercard

However, Indigo Platinum Mastercard does not require a security deposit, and also there are no monthly maintenance fees.

It offers a standard annual percentage rate of 24.9% fixed.

Citi Rewards + card

Citi Rewards + Card is designed specifically for those creditors who have a good or excellent credit score.

The card provides many advantages to its users, such as earning 2 points per dollar at supermarkets and gas stations on up to $6,000.

Citi Rewards + card
Citi Rewards + card

You can also earn 1 point on any other purchase. These points can later be traded for gift cards.

Additionally, if your application is approved, you will earn 15,000 starting bonus points in case you spend $1,000 within three months of your account opening.

The good thing about this card is that it does not have an annual fee. However, based on your creditworthiness, you will be charged from 15.49%-25.49% yearly percentage rate.

Overall, if your credit score is good Citi Rewards + Card will offer you many benefits, which can help you save a lot.

Wrapping up

From the two types of credit cards, secured and unsecured, the second one is more common and preferable for customers. Unsecured credit cards are riskier for the issuer as they do not have collateral tied to the loan. The pros of unsecured credit cards include no requirements for securing deposits and better rewards than secured credit cards. In case you have a good credit score, the terms and conditions of the card may offer more benefits.

On the other hand, even though for people having a bad credit score, the conditions are not that beneficial, they may use the opportunity to build their credit.

Unlike mortgages or car loans, which provide higher amounts and require collaterals, unsecured credit cards are usually for day-to-day expenses. Having no guarantee linked to the loan, the recoverability of it becomes more difficult for lenders, and the probability of default gets higher.

You should note that if you have a fair credit score or even less, unsecured credit cards may not offer the best conditions. They will typically charge you more based on your riskiness. However, from the customers’ point of view, it is an excellent opportunity for rebuilding and improving their credit score.

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To be honest, there is no such thing as the best credit card. From the above-discussed list, you can see that each of the cards is targeted to a specific audience and offers benefits by grouping the users.

Users with bad to exceptional credit score, everyone can get unsecured credit cards. Different product types are developed to satisfy the needs of each target group from students to experienced workers. 

For students, rewards are given in case of higher grade point average. For employed borrowers, the payments made on time will give them an opportunity to earn bonuses. And for the ones who want to improve their scores, unsecured cards help to rebuild credit.

The difference is that based on the risk level of the borrower, the terms and conditions of the contract may differ. If your credit score is fair, a lender may charge you more on the interest amount. However, the good thing is that you do not need an initial cash deposit, and the credit limit may be higher as well.

Overall, if you are thinking of a type of loan to rebuild and improve your score and credit history, consider unsecured credit cards as a good option to start with.

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Andrei Shilkov

Blog author. I am well versed in Finance and Digital Marketing. I have two bachelors degrees in Finance. Born in Russia, but later moved to the USA, to western Pennsylvania, the city of Pittsburgh. I have a Certified Public Finance Officer (CPFO) certificate. I also worked at IRS and Microsoft.

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