Best Card Summary
Capital One QuicksilverOne Cash Rewards Credit Card
Why it is one of the best unsecured credit cards: Consumers with fair to good credit may be eligible for this unsecured card that charges a $ 39 annual fee. You will earn a flat rate of 1.5% cash back, which is equivalent to some top rewards credit cards.
Capital One Platinum Credit Card
Why it’s one of the best unsecured credit cards: The Capital One Platinum Credit Card is a solid entry-level unsecured card for people with low-steller credit. You will not pay an annual fee, and after six months of responsible payments, you will automatically be considered for a credit limit increase.
Travel Student Award from Capital One
Why it’s one of the best unsecured credit cards: For students with a limited credit history, Journey Student Rewards from Capital One is designed like a crash course in credit cards. You will earn 1% cash on purchases with this unsecured card and pay back 1.25% for each month. Eno®, the Capital One® subsidiary, can help you manage your account and monitor due dates.
What is Unsecured Credit Card for Fair Credit?
Unsecured credit cards for fair credit are not supported by cash deposits like secured cards. They are traditional credit cards that can be used to pay for purchases and are subject to interest and late fees.
Unsecured credit cards for fair credit are designed for those who have trouble getting approved for regular cards. They have low approval requirements, so you may be approved for one even with a reasonable credit score. They can provide a good opportunity to rebuild or establish your credit, but they often have drawbacks such as high interest rates and fees.
Unsecured credit cards for fair credit are useful for those who:
Do you have fair credit?
Your credit score is a numerical representation of your credit. This is one of the factors that lenders use when making approval decisions.
Your credit score indicates how well you pay off your loan and how large the risk represents the lenders. There are many different credit scoring models in use today, but the most common is the FICO score.
Your FICO score is calculated based on the data in your credit report collected by three major credit bureaus: Equifax, Experian and TransUnion. That data includes your outstanding debts, payment history, defaults, judgments and bankruptcies.
- Extraordinary (800+)
- Very good (740-799)
- Good (670–739)
- Fair (580-669)
- Bad (579 and below)
If you have a credit score in the appropriate FICO category, then you have the appropriate credit. People with unbiased credit have little credit and often find it difficult to obtain a new unsecured credit card.
How to do unsecured credit card for fair credit work?
People with fair credit are somewhat risky to creditors. They are more likely to default than someone with a higher score, which is why applicants with fair credit are often denied new cards. Credit cards are designed to provide a second chance for people with fair credit, while also protecting the lender against the possibility of default.
Typically, creditors use secured cards to offset their risk. These cards require a cash security deposit in the account, typically 50% to 100% of the credit limit.
If you miss the monthly payment on a secured card, the creditor can use the money from the deposit to pay the bill. Most secured credit cards have very low credit limits.
With unsecured cards for fair credit, issuers compensate for their risk by imposing higher interest rates, stricter penalties for late payments and regular maintenance fees. Issuers make more money in case of cardholder defaults, with a higher cost to use the card. Like secured cards, unsecured cards usually have lower credit limits for fair credit, although they usually exceed the limit of secured cards.
Benefits of unsecured cards for people with fair credit:
- No initial cash deposit
- High credit limit
Drawbacks of unsecured cards for people with fair credit:
- High interest rate
- Potential High Annual Fee
- Expected Monthly Maintenance Fee
How can you choose an unsecured card for Fair Credit?
If you have proper credit and are looking for an unsecured credit card, then research these key features before applying:
- Annual Fee
- Additional fees and charges
- credit limit
- Ability to raise credit limit
- Penalty apr
- Foreign transaction fee
- Reporting to three credit bureaus
- Cardholder benefits
- Pre qualification
For unsecured credit cards, the biggest potential impact to your credit and finances are APR, annual fees and additional fees. These are features that can make an unsecured credit card costly for itself even with responsible use.
Unsecured credit cards for fair credit usually have APRs that are 10% to 15% higher than traditional cards for people with good credit scores. Keeping a balance on a high-interest card can result in significant interest charges, so you should find the card with the lowest possible rate.
Most credit cards for fair credit charge an annual fee to maintain the account, either in a large amount or divided into monthly installments. Many people charge a variety of additional fees, including monthly maintenance fees, account verification fees, credit limit enhancement fees, and more.
All these charges are charged directly to your balance, where they will earn interest just like shopping. Even if you never use the card for shopping, you just have to own it and spend money as a fee.
Also, the credit limit on unsecured cards for fair credit is generally much lower than on traditional cards. All those charges can result in a high utilization ratio, which can negatively impact your credit score.
To save money and prevent further damage to your credit score, you should look for a card with the lowest annual fee and the least additional charge.