What are Unsecured Credit Card Interest Rates?

Credit cards tend to have higher interest rates than car loans or mortgages, in part because credit card debt is riskier for banks. However, the rates vary from one card to another, and it depends on your own credit profile. 

How to Get an Unsecured Credit Card With Poor Credit?

People with poor credit or no credit, or who have recently filed for bankruptcy will have the hardest time qualifying for an unsecured credit card, but it’s not impossible. For starters, you can improve your own chances of getting an unsecured credit card by applying for a secured credit card and using it wisely for six months (at least). The other option is to find a family member and become an authorized user on one of their credit cards. As you make timely payments, your own credit score could improve. 

What does an unsecured credit card have to do with my credit rating?

An unsecured credit card impacts your credit rating in a couple of ways. The balances and the credit limit on your unsecured card are reported to the credit reporting bureaus each month, which is one of the factors your credit score is based on. Another is your credit utilization percentage. A low debt-to-credit limit ratio helps to improve your credit score.

Who should get an unsecured credit card?

Unsecured credit cards offer numerous benefits, when used correctly. There are tons of examples of people who use credit cards as a part of their budget and overall personal finance strategy. While your decision to obtain an unsecured credit card is a personal one, you may find it helpful if you fall into one of these categories:

  • The budgeter. A credit card can be an integral part of your monthly budgeting process. Because the statements are easier to read and often broken down into categories of spending, it makes sense to use a card as part of the monthly budget. The key with this strategy is to pay the balance each month, but by doing this, you can use the card to bridge the gaps when your cash flow is a little tight. Plus if you enroll in a rewards program then you can earn some sort of rewards (like travel or cash back) for spending money on items you likely had budgeted each month anyways.
  • The frequent flyer. If you love to travel then you should definitely consider using a credit card with travel benefits and rewards. Almost all cards offer additional insurance protection, such as travel and trip insurance, lost baggage reimbursement, and extra rental car protection. Additionally, there are often rewards for booking with credit card partners, such as airlines and hotels. Lastly, most travel credit cards do not charge a foreign transaction fee when you use it overseas, which means you won’t receive an extra charge for simply using your credit card in a country with a different currency. 
  • The business owner. Not only do some business credit cards offer serious cash back or travel rewards, but a business credit card is an easy way to simplify monthly expenses. This is especially true for companies with multiple employees, where a card allows your employees to purchase what they need to while you keep track of the spending.  Many of the cards come with benefits specifically targeting business owners, such as travel insurance or purchase protection.  
What is an unsecured credit card NOT good for?

As many perks and benefits the unsecured credit cards offer, it doesn’t mean it’s the right fit for every consumer. If you know you might struggle with paying the balance in a timely manner or you could be tempted to use it for things you truly can’t afford, then it’s not a good idea to take one on. When you carry a balance on your unsecured card from month to month – rather than paying it off each month – the danger is that you will let the balance grow and avoid living within your means.

Additionally, if you are unable to pay it off each month then you are likely accruing interest. This means you end up paying more for an item than you originally planned and could start a vicious cycle of taking on too much debt. 

About the Authors

Sara Coleman

Written by: Sara Coleman

Freelance Financial Writer

Freelance writer with several years of experience covering personal finance topics such as insurance, loans, credit cards, budgeting and more.

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Joe Templin

Reviewed by: Joe Templin

Charted Financial Consultant - CAP

Joe Templin is a Charted Financial Consultant (ChFC), MCEC, CEC, CLU and CAP with well over three decades consulting, coaching, and teaching. He's an author of the Amazon Kindle #1 New Release "Every Day Excellence" and host of The Human Kaizen Podcast.

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Kal Salem

Fact checked by: Kal Salem

MA Accounting - Arizona State University

A CPA and finance professional working with small businesses to educate owners and grow alongside their businesses. He holds a Masters in Accounting and a BS in Supply Chain Management. Owner at Salem CPA Services LLC.

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