Unsecured credit card is a credit card which is given to you without securing it against an asset. Secured credit is where it is secured against a particular asset. For example if you have mortgage, then this is secured credit because if you continually do not make the payment on the loan then you could be reposed from your house to pay the debt. But a credit card is unsecured, because it is not linked to any particular asset like a house or car.

These unsecured credit cards are for people with bad credit -or- no credit. Unsecured credit cards do not require security deposits and are best for individuals with less than perfect credit. TIP: If you don't qualify for an unsecured credit card, try a secured card. Or, check out our guaranteed approval cards for additional options.

Credit card companies protect themselves against the higher risk they take on with these cards by charging higher fees. Most unsecured credit cards for people with bad credit come with an annual fee, which may range from $25 to $95. In addition, you may face one-time charges, such as an account set-up fee (often around $30), and a program fee (e.g. around $90). Typically, unsecured cards also have recurring annual charges, such as a participation fee or an account maintenance fee, ranging from $70 to more than $140 per year.

Your credit rating plays an important role when trying to obtain an unsecured credit card. Credit scores range from the lowest at 300 to the best of 850. Having a credit score over 700 will most likely approve you for the best credit card rates available. If your credit score is under 700 don't panic. Most banks only require a credit score of 620 to be approved for a prime mortgage rate.

On the other hand, credit cards are more difficult to obtain than mortgages because they are unsecured. If your credit scores are fewer than 700 you can still qualify for a credit card at a higher rate.

With unsecured credit cards, again like an unsecured loan, the credit card company (which is the lender) does not demand that you offer a specific asset to be pledged as collateral. Instead, the credit card company extends you a credit card line because of your general record of reliability and a proven, stable source of income.

The credit card company will have nothing to go on except your credit history, which they will pull from the credit ratings organizations. Your credit history should clearly demonstrate that you have the ability and the willingness to pay any of your debts on time. In order to obtain approval on your unsecured credit card application, you must meet certain minimum credit scores. That minimum score will depend on the credit card issuer.

Unsecured credit cards are the source of unbridled financial freedom. When managed correctly, unsecured credit cards will give you extended purchasing power. However, the freedom that unsecured credit cards allow can also aid in your plunge into the morass of debt. If you follow a prudent financial strategy, there should be no problem. Despite their undeserved reputation, unsecured credit cards are not evil.