How to upgrade from a secured to an unsecured credit card
Quick insights
- Secured credit cards typically require a cash deposit, which serves as collateral for the credit line and determines the credit limit.
- Upgrading from a secured to an unsecured credit card can provide access to better credit terms and rewards.
- To upgrade, you'll typically need to demonstrate responsible credit behavior, such as making on-time payments and keeping credit utilization low.
If you've been using a secured credit card responsibly, you may be eligible to upgrade to an unsecured credit card. This can be a significant step in your financial journey, offering benefits like higher credit limits, more competitive rewards and increased financial flexibility. While Chase does not offer secured credit cards, it can be helpful to understand how this spending tool could help you make progress on your financial journey.
In this article, we'll walk you through the process of upgrading (or graduating) from a secured to an unsecured credit card, highlighting some advantages and potential impacts on your credit score.
Understanding secured credit card upgrades
A secured credit card requires a security deposit, which becomes your credit limit. This type of card is often used by individuals looking to establish or rebuild their credit. (Note that Chase does not offer secured credit cards.)
An unsecured credit card, on the other hand, doesn't require a security deposit, and your credit limit is determined by your creditworthiness.
Keep in mind that “unsecured” refers to the lack of security deposit and does not mean the card is less secure. Upgrading from a secured to an unsecured credit card means you're transitioning to a credit card that doesn't require a security deposit. This can be a financial milestone, as it indicates to lenders that you've demonstrated responsible credit behavior.
Using the secured card wisely may help you qualify for an upgrade. Here are some of the financial habits that could potentially put you on the path to upgrading from a secured card:
- Make on-time payments consistently.
- Pay more than the minimum.
- Monitor your credit regularly.
- Familiarize yourself with your credit card issuers’ policies and terms.
The process of upgrading to an unsecured credit card
Credit card issuers may have different guidelines for graduating from an unsecured credit card, but here are some general steps you may want to follow:
- Check your eligibility: Review your account to ensure you've made on-time payments and kept your credit utilization ratio low. You can also contact your issuer to inquire about their upgrade process and eligibility criteria.
- Contact your issuer: Learn your card issuer’s policies for requesting an upgrade. Contact your issuer for specific details.
- Provide additional information: Your issuer may request additional information, such as income verification or employment status, to assess your creditworthiness.
- Review and compare offers: If you're eligible for an upgrade, your issuer may present you with alternative unsecured credit card options. When selecting a credit card, you may want to compare the terms, benefits and rewards of each offer to determine which one best suits your needs.
If you’re trying to improve your credit score, Chase offers a free service called Chase Credit Journey® that may be helpful for monitoring your credit score.
Alternatively, if the unsecured credit cards offered by your credit card issuer don’t meet your needs, you could explore unsecured credit cards from other issuers. Some credit cards offer welcome bonus offers to attract new cardmembers. These offers typically have spending thresholds you have to meet within a specified timeframe.
Benefits of upgrading to an unsecured credit card
Upgrading to an unsecured credit card can offer several benefits, including:
- No security deposit required: You'll no longer need to tie up a deposit as collateral, freeing up your funds for other uses. When upgrading or closing the secured card account, the bank may refund the security deposit in the form of a statement credit, check or direct deposit.
- Higher credit limits: Unsecured credit cards often offer higher credit limits compared to the credit limits on secured cards, providing you with more flexibility and purchasing power.
- Rewards: Unlike secured cards that may not offer rewards, unsecured credit cards often have rewards programs that offer points or cash back on qualifying purchases.
Timeline for upgrading
The timeframe for upgrading from a secured to an unsecured credit card varies depending on your credit card issuer. Some issuers may automatically review your account for upgrade eligibility after a certain period, typically 12–18 months. Others may require you to request an upgrade or meet specific criteria.
Impact on credit score
Upgrading to an unsecured credit card may have both positive and negative effects on your credit score. On the positive side, it can:
- Reduce credit utilization: By increasing your credit limit, you may lower your credit utilization ratio—the ratio of credit you’re using compared to the total credit available to you—which can positively impact your credit score.
- Demonstrate creditworthiness: Successfully managing an unsecured credit card demonstrates your ability to handle credit responsibly, which can potentially contribute to a stronger credit profile.
However, the upgrade process may also involve a hard inquiry on your credit report, which can temporarily affect your credit score.
To maintain a healthy credit score, it can be helpful to make on-time payments, keep credit utilization low and monitor your credit report for errors.
In summary
Upgrading from a secured to an unsecured credit card can be a milestone in your financial journey. By understanding the upgrade process, benefits and impact on your credit score, you can make an informed decision and receive potentially better credit terms and rewards.
