The market is flooded with many different types of credit cards such as – store credit cards, premium cards, secured credit cards, unsecured credit cards, debit cards, affinity credit cards, and charge cards, etc. Today, we are going to discuss unsecured credit cards, in detail.
What are unsecured credit cards?
It is a type of credit card for which you don’t need to make a deposit for the credit limit. Moreover, there is no requirement to make a deposit in case you are looking to increase your credit limit. Most of the users are quite familiar with this type of credit card .
An unsecured card doesn’t require cash collateral — you can get higher credit limits, lower fees and more valuable rewards than you would with a secured one.
How To Qualify for unsecured credit card?
If you have filed bankruptcy, have bad credit, or have no credit, then you will surely have to face hard times in getting an unsecured credit card. On seeing your poor credit history, most of the creditors will decide not to take the risk of giving you the credit card. On the contrary, a secured card will help you get back on the track and also assist you in having a better credit card.
If you have a secured card, there are chances of converting your card into unsecured credit card and get back your deposit when you make timely payment for a set amount. This time required for the conversion of credit card can vary from card companies but usually, it takes a maximum of 15 months.
All you need is to use your secured card smartly for a minimum of six months, this way you will be improving your chances of getting an unsecured credit card. You can have a joint credit card (unsecured) with one of your family friends or relatives. This way you don’t have to make the security deposit and above all, it will help you to make significant improvements in your credit score.
Secured vs. Unsecured Credit Cards
Fee factor – You can easily find unsecured credit cards having no annual fee. However, on the contrary, for secured credit cards, there is always some amount that you need to pay. Some banks only charge $20 but there are some banks charging processing fee+annual fee+application fee and moreover customer service fee as well. I know you just said WHAT!!! in your mind. So, this is where unsecured credit cards become your obvious choice.
Convenience – Let us assume you are looking to have a secured credit card, so now if you agree to pay any applicable fee or even the security deposit, you will be approved to have one instantly, no questions asked. On the other hand, for unsecured credit cards, you need to have an impressive credit score. In this case, secured cards get the cake.
Rewards – Unsecured credit cards can be a great choice for all those who are infatuated with the rewards, well I like to admit here that I am too. Alas, secured credit cards don’t offer such rewards. Sounds like the unsecured card is the winner here.
Interest rates – Of late, there has been a considerable rise in the interest rates for everyone. Secured cards have gained a reputation of being unlike the norm, however, as you are backing your card make sure you use along with a security deposit. You can have attractive offers on secured cards than the unsecured cards. So, here secured cards are the right choice for you.
Customer services – Certainly, the quality of service may vary considerably in the industry, but there is one thing i.e. secured cards are made for all those who are facing bad credit. This is the reason most of the issuers don’t give much importance towards offering prompt customer support services. Well, this is where unsecured cards score over secured cards as you can expect instant customer support services. So, the obvious choice here is the unsecured credit cards.
Money management – The blend of unsecured cards and money management issues can have hazardous results. On the contrary, secured cards help you lead your life within your means, since you can spend beyond the security deposit (read as amount).
Let us discuss some of the best unsecured credit cards of 2016
Capital One Platinum Unsecured Credit Card
– The name itself has some attraction that makes you have a look at it. It is quite popular credit card amongst the consumers. The company mainly offers this card to all those people having average credit. The best thing about this credit card is that it enjoys identical benefits as the Platinum MasterCard that includes travel accident insurance, auto rental insurance, and various other extended warranties.
You have the option of choosing the payment due date of your choice and you also have around the clock monitoring and have free access to your credit score as well. Moreover, you don’t have to deposit any annual fee but the APR is on a higher side i.e. 24.9%. Nevertheless, the overall terms and conditions of the card make it one of the most preferred unsecured credit cards.
Credit One Unsecured Platinum Visa Card
– Probably, one of the key features of this card is that you get to know whether you have qualified, for this card, without influencing your credit score. Credit One also informs about your activities to the three leading reporting bureaus. If you have this card, you also get to earn rewards and receive 1% cash back when you purchase grocery and gas. If you want to keep a track of the payments and the due dates, you can set-up an email or text alert as well. The company is also responsible for tracking your activity in case you surpass your limit, and whenever you register a positive activity, you will get rewarded for that.
Milestone Gold MasterCard Unsecured Credit Card
– This is one of the best-unsecured credit cards that you can have for yourself. The credit card takes the responsibility of informing your positive activities to the three top credit bureaus. Two of the key features of this card are that you get to customize the card as per your likings and you get to enjoy online access as well.
You don’t have any provision of earning any reward points, but it does offer Gold benefits that includes extended warranty coverage, roadside assistance, and much more. The APR is at 23.9% and the annual fee that you have to deposit is $35 and $99 entirely depending on what is your credit score look like.
Total VISA Unsecured Credit Card
– This credit card is also one of the preferred unsecured credit cards. It comes with instant approval, low balance, and reporting to the three credit bureaus. It does have it’s down with the card offering an APR of 29.99%, a processing fee of $89, and an annual fee of $75.
Indigo Platinum Mastercard Unsecured Credit Card
– If you are having a bad credit, this is one of the best-unsecured credit cards you can have. It offers you pre-qualification and it does not get reflected on your credit score and the best part is that it also accepts previous bankruptcy. As and when you qualify for the card, you will have the access to the online account management tools.
First Access Visa Unsecured Credit Card
– With this unsecured credit card, you enjoy the access to the card even if you have limited or poor credit history. While applying, you can be rest assured about the privacy and filling the form is quite easy. The best element of the card is that you get to receive a reply within 60 seconds. The company also report to the three major credit bureaus. You need to pay $89 as the application processing fee.
First Premier Bank Classic Unsecured Credit Card
– If you are looking for a good unsecured credit card, then this is the right choice for you. The credit card reports the key Consumer Reporting Agencies. The initial credit limit will be $300 and the available credit will be $225. The annual fee that you have to pay for the credit card is $75. There is a one-time payment of $99 that you need to pay for the upfront processing fee. If you fail to make this payment within 85 days, your application will stand canceled.
Advantages and Disadvantages Of Unsecured Credit Cards
- These cards offer you with a line of credit.
- There is no need to deposit any security, this makes you stay more liquid.
- The rewards are more prevalent and well-paid.
- Such cards allow you to spend beyond your means, which puts you at risk.
- The approval time takes a considerable amount of time.
So, if you are looking to get yourself an unsecured credit card, the above-discussed information will surely come handy.