Best Unsecured Credit Cards

If you’ve worked to establish better credit via a secured credit card and your credit scores are now in a better place, it’s time to move on to an unsecured credit card. Unsecured cards generally have better terms and features, including greater perks and higher rewards.

Sometimes your credit card issuer will offer to upgrade your secured credit card to an unsecured credit card if you’ve shown responsible habits. But if you’re shopping for a new card or ready to upgrade from your secured card, here are a few things to consider when choosing the right unsecured credit card.

Rewards

Compare the rewards categories, the types of rewards earned and how you can redeem them in order to identify the cards that will work best for you.

Credit card issuers will outline which purchases you can earn rewards on with your credit card. Generally speaking, rewards cards come in three flavors: flat-rate rewards, rewards for specific categories and rewards that change or rotate (for example, each quarter of the year or account billing cycle).

A flat-rate rewards card will earn rewards for every purchase you make at the same rate (like 2%). Rewards cards for specific categories earn you higher rewards rates on certain types of purchases, like groceries, gas or eating out. A credit card with rotating rewards works in a similar way, except the higher-tiered categories will change each quarter and may need to be activated manually.

Rewards credit cards typically earn rewards as cash back or points. Cash back generally can be redeemed for statement credits to lower the overall balance of your credit card account, deposited directly into your bank account or used at check out with specific merchants. 

Some cash-back cards may earn literal cash back (e.g. 2% of the purchase price, issued in dollars) while others may earn in the form of points (e.g. 2X points for every $1 spent) that can be turned into cash when redeemed. For those point-based cash-back cards, earning 1X points is the same as 1% cash back.

Points generally have more redemption options and may be worth more or less than 1 cent depending on how they’re used. Some standard redemption options include gift cards, using them for merchandise or donating them to charity.

Travel cards usually earn their rewards as points or miles. Some points may have a standard value for all redemptions (e.g., 1 cent per point), while others may give you greater value for specific redemptions (e.g., travel at 1.25 cents per point).  Depending on the program, you may be able to transfer your points to other airline or hotel programs for even greater potential value and flexibility.

For the cards that earn miles, those are usually airline credit cards. These rewards are often best used for flights on one specific carrier and its partners. For that reason, it’s almost always best to avoid redeeming them for rental cars, hotels, and other non-air-travel options.

APR

A credit card’s annual percentage rate, or APR, is the rate at which your credit card balance will accrue interest over the course of a year. Should you revolve a balance from month to month, you’ll be charged interest at the end of your billing cycle at a monthly rate (i.e., your APR divided by 12).  Generally, the better your credit, the lower your APR.

A good rule of thumb when it comes to credit cards -- whether secured or unsecured -- is to try to pay off your entire statement balance every month. That way, you won’t need to worry about any interest charges.

However, if you’re unable to pay your full statement balance, try to pay more than the minimum required payment. That way, you’ll lessen the amount of interest you’ll accrue and get the debt paid off faster

Annual fee

Some unsecured credit cards charge a yearly fee to have them. If you’re interested in an unsecured card with an annual fee, you’ll want to make sure that it fits into your budget. That means generating enough rewards through your normal spending and using any of the included benefits to cover the annual fee, and then some.

If the credit card has a welcome bonus, reaching it through normal spending is a good way to help cover this fee initially. Typically, if a card carries an annual fee, it’ll have higher rewards and better card perks, which may help offset the annual fee.

If you can’t cover your annual fee with rewards, benefits or statement credits, consider a no-annual-fee credit card. 

Eligibility

Your credit score will help determine your credit card terms. You’ll typically secure better terms -- like a lower APR -- with a higher credit score.

Unsecured credit cards have credit score requirements that vary by lender and card type. Credit cards with higher credit requirements often boast better features, like lucrative welcome bonuses, higher reward rates and better card perks.

Some credit card issuers offer preapproval, so you can check to if you’re likely to be approved for a card without affecting your credit. Just keep in mind that even if you’re preapproved for a credit card, it doesn’t guarantee you’ll get the card.

In contrast, the best secured credit cards typically have much easier approval requirements. Some will approve you with low credit scores or even no credit score at all. Instead, they require a security deposit (e.g., $200), which may fund your credit line.

Other benefits

Unsecured credit cards typically have more card perks than secured credit cards, such as travel insurance, purchase protections or extended warranties.

The more advanced unsecured credit cards sometimes offer annual statement credits for travel or specific purchases. Generally speaking, a card with these types of perks will require an annual fee, so be sure the card matches your budget and that you’re able to take full advantage of whatever perks the card includes.

The point of applying for an unsecured credit card is usually to avoid security deposits because you’ve improved your credit score to qualify for better card products. If that’s the case, you should continue to use the habits you built while improving your credit.

That means using your unsecured credit card like it’s a debit card. Only make purchases you can afford to pay off in full to avoid any interest charges.

Paying your balances off as soon as you can will also help you keep your credit utilization low, too. Maintaining a credit utilization ratio that’s below 30% can help improve your credit scores, and even better if under 10%.

Ideally, you would continue to use these good habits to raise your credit score further. This allows you to take advantage of better cards and lower interest rates for big purchases, like a car or house.

If you’re still working to repair your credit, the obvious alternative to an unsecured credit card would be a secured credit card. Once your scores have improved, you can start to look into whether you’d qualify for an unsecured credit card.

There are ways to build credit without a credit card, too. You could use a credit builder loan, which is like a personal loan, only you receive the money at the end rather than upfront. A standard personal loan could also work -- they typically have longer repayment terms and lower interest rates than credit cards.

Depending on the issuer, you may have the option to graduate or upgrade directly from a secured credit card to an unsecured one.  If so, it usually counts as a product change and therefore won’t require you to fill out another application. Even better, it won’t affect your credit score.

1. Find a card that matches your budget
2. Follow one of the links above to be taken to the card issuer's website
3. Fill out an application with all of the required financial and personal information
4. Use your card responsibly and always pay your bill on time

• Credit One Bank® Platinum Visa® for Rebuilding Credit 
• Total Visa® Card
• Milestone Mastercard®

*To qualify for the welcome bonus, you must open and fund a new Rewards Checking Plus account through Upgrade and make 3 qualifying debit card transactions from your Rewards Checking Plus account within 60 days of the date the Rewards Checking Plus account is opened. If you have previously opened a checking account through Upgrade or do not open a Rewards Checking Plus account as part of this application process, you are not eligible for this welcome bonus offer. Your Upgrade Card and Rewards Checking Plus account must be open and in good standing to receive a bonus. To qualify, debit card transactions must have settled and exclude ATM transactions. Please refer to the applicable Upgrade VISA® Debit Card Agreement and Disclosures for more information. Welcome bonus offers cannot be combined, substituted, or applied retroactively. The bonus will be applied to your Rewards Checking Plus account as a one-time payout credit within 60 days after meeting the conditions.

**All information about the Discover it Cash Back and Capital One QuicksilverOne Cash Rewards Credit Card has been collected independently by CNET and has not been reviewed by the issuer.