Best Unsecured Credit Cards for Bad Credit

The main difference between a secured credit card and an unsecured credit card is that secured cards require you to place a refundable security deposit when you open your account. Apart from this security deposit, secured and unsecured credit cards aren't necessarily better or worse for your credit. The amount of this deposit typically serves as the credit limit for the secured card, which means you have to pre-pay for purchases with a secured card. You’ll usually have to put down the deposit when you apply, and you’ll get it back when you close your account or upgrade to an unsecured credit card. Unsecured credit cards, on the other hand, give access to a credit line that isn’t “secured” with a deposit.

There is no difference between secured and unsecured credit cards when it comes to building credit. All major secured cards report account information to the major credit bureaus on a monthly basis, just like unsecured cards. In fact, you can’t tell secured and unsecured cards apart on a credit report. So as long as you use either type of card responsibly, your credit score will improve.

Below, you can get a better feel for the differences and similarities between secured and unsecured credit cards by seeing how they compare in several important categories.

Secured vs. Unsecured Credit Cards: Key Differences

Approval Odds of Secured Credit Cards vs Unsecured Credit Cards

Secured credit cards are easier to get approved for than unsecured cards. Because you’re technically pre-funding your credit line with a secured credit card, you can’t spend more than you can afford to repay. The deposit is held in an account by the card issuer, so if you don’t pay your bills, the deposit is used to cover the cost. That’s why secured credit cards are able to offer nearly-guaranteed approval to people with bad credit, while charging very reasonable fees. That being said, secured credit cards are real credit cards – they have interest rates, and you have to pay your monthly bill on time.

In contrast, unsecured credit cards tend to be harder to get, because the card issuer takes on a lot more risk by extending an unsecured credit line. In other words, you can spend more on an unsecured card than you can afford to repay. There are unsecured credit cards for people of all credit levels, but if you have bad credit, you’re likely to pay high non-refundable fees for a very small line of unsecured credit.

Choosing Between Secured & Unsecured Credit Cards

Overall, the toughest decision between secured and unsecured credit cards comes when you have damaged credit. With bad credit, it’s harder to get approved for an unsecured credit card, and the unsecured options available to people with bad credit are far less attractive.

If you have limited, fair, good or excellent credit, you should be able to start with a solid unsecured card. If you’ve got bad credit and the flexibility to choose either a secured credit card or an unsecured one, always go secured. It will cost you a lot less in the long run and help you build credit just the same. You can check your credit score for free on WalletHub to see where you stand.

The best unsecured credit card to rebuild credit with is the Credit One Bank® NASCAR® Credit Card. This card has a reasonable annual fee, gives 1% cash back on all purchases, and starts cardholders off with a $300 minimum credit limit. It also accepts people with bad credit, and you can check if you pre-qualify for this card.

Another good option to consider is the Credit One Bank® Platinum Visa® for Rebuilding Credit. It gives 1% cash back on eligible purchases.

Best Unsecured Credit Cards to Rebuild Credit

An unsecured credit card is one that does not require a security deposit or any other collateral to open the account. In addition, rebuilding credit generally means you have a credit score of less than 640. In that case, most unsecured cards that you may qualify for will be costly.

What you should know before getting an unsecured card for rebuilding credit:

• An unsecured credit card is typically not the most cost-effective way to rebuild credit. Because you’re considered a high credit risk, your options are very limited. In addition, your spending power will be greatly reduced by numerous fees and high interest charges.
• A better option to rebuild credit would be to open a secured credit card account. Your odds of approval will be greater because you’ll be setting your own credit limit with a refundable security deposit, usually starting at $200.
• Secured cards tend not to have one-time and monthly fees, so they end up costing you less in the long run. You’ll also get your deposit back in full when you close your account with no unpaid balance.

So, the best way to rebuild credit is by applying for a secured credit card. Some good options include the Capital One Platinum Secured Credit Card, and the OpenSky® Secured Visa® Credit Card.

A partially secured credit card has a spending limit that is bigger than the refundable security deposit held by the issuer as collateral. For example, the Capital One Platinum Secured Credit Card can be partially secured since your deposit could be either $49, $99 or $200 while your spending limit starts at $200.

With a partially secured credit card, a credit card company only has a partial guarantee that they will be repaid if the cardholder maxes out the card. That’s why it’s rare for a secured card to be partially secured from the start.

What You Should Know about Partially Secured Credit Cards

• The Capital One Platinum Secured is the only partially secured credit card.
• All cardholders start with a $200 credit limit.
• The deposit you’re required to place could be $49, $99 or $200, depending on your credit standing.
• If your credit history, income, and debt situation are all really bad, you’ll probably have to put down the full $200. But if you’re closer to fair credit or have limited experience, it may be partially secured.
• The Capital One Platinum Secured has a $0 annual fee, regardless of what your deposit winds up being.

It’s more common for a secured credit card to become partially secured or unsecured after a while. This happens when the issuer gives the cardholder a credit-limit increase without the need of adding to the card's security deposit. Or, they may give a deposit refund as a reward for consistently paying on time. 

The Capital One Platinum Secured might be the only partially secured card available right now but you shouldn’t get too bummed out about the lack of alternatives. As far as credit building goes, there’s no difference between a fully secured credit card, a partially secured credit card, and an unsecured credit card. The amount of your security deposit, if you have one, is not listed on your credit reports.

Benefits of a Partially Secured Credit Card

There are only a couple added benefits that a partially secured credit card provides relative to a fully secured card. For one thing, they offer the ability to borrow. You can’t really get a loan from a fully secured credit card because you have to fully prepay your purchases. And with a partially secured credit card, you get to keep more of your money out of the credit card company’s custody.

One of the easiest unsecured cards to get approved for is the Credit One Bank® Platinum Visa® for Rebuilding Credit. You can get approved for it even with bad credit. This card offers a $300 starting spending limit. And you can use it wherever Visa is accepted.

Easiest Unsecured Credit Cards to Get Approved For

The easiest unsecured credit cards to get generally work best for minor emergencies. You will only receive a small amount of spending power, after all.

Unsecured credit cards for people with bad credit also tend to be very expensive, charging lots of fees and high interest rates. So, if you don’t need a small emergency loan, the best course of action is to improve your credit inexpensively with a secured card. Secured cards are cheaper than unsecured cards, build credit just as effectively, and offer the closest thing you’ll find to guaranteed approval.

To learn more, check out WalletHub's complete list of the year’s easiest credit cards to get approved for​.

The best credit-building credit card for bad credit is the U.S. Bank Cash+® Visa® Secured Card because it accepts applicants with a credit score as low as 300 and sends monthly reports to the credit bureaus. The card also comes with a $0 annual fee and offers 1 - 5% cash back on all purchases. Because it’s a secured credit card, you’ll have to put down a refundable deposit of at least $300. Your card’s credit limit will match the deposit amount.

Best Credit-Building Credit Cards for Bad Credit

• U.S. Bank Cash+® Visa® Secured Card: Best Overall
• Capital One Platinum Secured: Low Minimum Deposit
• NASCAR Credit Card: Best Unsecured
• Amazon.com Secured Credit Card: Best Retail Card

Picking the right credit card is essential for building your credit score quickly and cheaply, but the way you use it is even more important. As a rule of thumb, always pay your bill on time and keep your credit utilization low. For more information, you can check out WalletHub’s complete guide on how to build credit.

You can find a list of available unsecured credit cards for bad credit here​​​​​​​. Keep in mind that most of these cards will charge high fees without providing you with much spending power.

You can get a buy now pay later deal with bad credit via services like Affirm, Quadpay and Afterpay. These allow consumers to spread out their payments on a purchase over weeks or months. Please note that these companies charge interest rates ranging from 0% to 30%.

They will run a soft inquiry of your credit and decide whether or not to approve you for a loan amount that matches the price of the item you're buying.

Keep in mind that your loan and payments will affect your credit score. So paying on time can help you build a positive credit history.