Changing a Secured Credit Card to an Unsecured Card

A secured credit card can help you establish credit for the first time or positively impact existing credit if you’ve damaged it with missed payments, defaults, or bankruptcy. While secured credit cards offer many of the same advantages as traditional credit cards, they do have some limitations.

Once your secured card has had a positive impact on your credit standing, you may be ready for an upgrade. Below, we explain how to transition from a secured credit card to a traditional, unsecured account.

What Is A Secured Credit Card?

A secured credit card requires that you put down a cash deposit, which serves as collateral for the charges you make with the card. Usually, the amount of the deposit is the same as your credit limit. So if you deposit $1,000, you’ll be able to borrow up to that amount.

If you miss payments, the bank can cover their losses by drawing on money from the deposit. That said, making on-time payments is just as important with secured credit cards as it is with traditional cards, especially if you are using the secured card to build credit.

As with standard credit cards, secured cards require that you make a minimum monthly payment. Beyond that, you can carry a balance from month to month, but you will be charged interest on that balance. You need to pay your balance off in full each month to avoid interest payments.

Recommended: Differences Between a Secured and Unsecured Credit Card

Benefits of Secured Credit Cards

Secured credit cards offer a number of advantages:

Easier Approval

Because secured cards require users to put down a deposit, banks are taking on relatively little risk. This often leads to more lenient eligibility requirements and makes them accessible to individuals with no credit or a poor credit history.

Can Help Build Credit

If you have limited or poor credit, it can be difficult to get approved for credit cards or loans. Making small purchases regularly with a secured card and paying off your bill in full and on time can help you establish or build your credit profile.

If you’re looking to build credit, you may also consider becoming an authorized user on a credit card.

Convenience

You can use secured credit cards anywhere traditional cards are accepted. Secured credit cards allow you to shop in person or online without carrying cash around with you. It’s also difficult to accrue too much debt because you’re limited by the amount of your deposit.

Drawbacks of Secured Credit Cards

Alongside the benefits offered by secured cards, there are limitations to be aware of:

Coming Up With the Deposit

In order to get a secured card, you will have to come up with the cash that will serve as your deposit. That may require you to save for a period of time before you apply.

Once you deposit that cash, you can’t access it while your secured card is in use. That said, your deposit is refundable when you close the account or convert your secured credit card to an unsecured card.

Higher Rates

The annual percentage rate (APR) is the interest rate you’re charged when you carry a balance on your card. Secured credit cards may offer higher interest rates than traditional cards, which can end up costing you more money if you carry a balance. Some may also charge application fees and/or annual fees.

Spending Is Limited

Credit cards, whether they’re secured or unsecured, generally have spending limits. For a secured credit card, your limit will depend on the size of the deposit you make, which will typically range from $200 to $2,000. If you’ve deposited $1,000 and need to replace your transmission for $1,800, you won’t be able to put the repair on your card. In comparison, the average credit limit across all cards is $29,855.

What Is an Unsecured Credit Card?

An unsecured credit card is a standard credit card that does not require a security deposit or collateral to open an account. Instead, approval and credit limits are based solely on your creditworthiness, income, and debt levels. These are the most common type of credit cards, offering benefits like rewards, cash back, and higher credit limits.

If you fail to pay an unsecured card, it will negatively impact your credit. However, the card issuer cannot immediately seize assets as they could with a secured credit card.

When You Might Upgrade to an Unsecured Credit Card

After you use your secured credit card responsibly for a certain period of time, you may be eligible to upgrade or “graduate” to an unsecured credit card. This allows you to keep your card, but your security deposit will be returned so that your credit card becomes an unsecured credit card. You might also qualify for a higher credit limit.

Upgrading from an unsecured to a secured credit card with the same issuer allows you to keep your credit history intact and avoid a new credit application — and hard credit inquiry. As a result, the upgrade shouldn’t have any negative impacts on your credit.

When You Might Keep Your Secured Credit Card Open

If your current issuer lacks good upgrade options or if you want better rewards/features elsewhere, you might consider applying for a secured credit card with a different issuer. This will result in a hard credit inquiry which can cause a slight, temporary dip in your credit score.

Even if you get a new secured credit card, you might consider keeping your secured credit card open, as it can help lower your overall credit utilization. Also keep in mind that when you close a credit card, the account will eventually fall off your credit reports. This may lower the average age of your accounts, which is factored into your score.

Guide to Upgrading from a Secured Card to Unsecured Credit Card

If you’re looking to upgrade to an unsecured card, these strategies can help:

Build a Strong Payment History

Your payment history is a key factor an issuer will consider when deciding whether to upgrade your account. Aim to pay your balance in full and on time for at least six to 12 months before requesting an upgrade. Even one missed payment can delay your progress. Setting up automatic payments or calendar reminders can help you stay consistent. A long stretch of reliable payments shows your card issuer that you can manage credit responsibly without needing a security deposit as a safety net.

Keep Your Credit Utilization Low

Credit utilization refers to how much of your available credit you use at any given time. Ideally, you want to keep your balance below 30% of your credit limit — even lower if possible. For example, if your secured card has a $500 limit, try to keep your balance under $150. Low utilization demonstrates that you’re not relying heavily on credit and manage spending wisely.

Keep an Eye on Your Credit

Before requesting an upgrade, it’s a good idea to review your credit reports. You can request free copies of your credit reports from the three major credit bureaus — Equifax®, Experian®, and TransUnion® — by visiting AnnualCreditReport.com.

Read through each report to make sure you have a clean payment history and no unexpected negative marks. If you see any inaccuracies, you’ll want to dispute them before applying for an upgrade. Knowing your credit standing can help you decide whether you’re ready to request a conversion or you should wait a little bit longer.

Ask Your Issuer About Upgrade Options

Many card issuers automatically review accounts for upgrades, but some require you to request one. Either way, it can’t hurt to reach out to your card issuer and ask whether you qualify to convert your secured card into an unsecured version. If the answer is yes, they may return your deposit and allow you to keep the same account open. If an upgrade isn’t available yet, ask what criteria you need to meet so you can work towards it.

The Takeaway

A secured card is an important tool for building or positively impacting existing credit. However, once you’ve established healthy credit card habits and a strong credit history, it may serve you to switch from a secured to unsecured credit card.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

Enjoy unlimited cash back rewards with fewer restrictions.

FAQ

Can I upgrade my secured credit card to unsecured?

Yes, in many cases, you can upgrade your secured credit card to an unsecured one, a process often called “graduating.” Card issuers typically review your account after a period of responsible use (such as six to 12 months of on-time payments and low credit utilization). If you qualify, the issuer may return your security deposit and convert your current account into an unsecured credit card. However, not all issuers offer this option; some may require you to close the secured card and apply for a new unsecured one.

How long does it take to convert a secured credit card to an unsecured one?

The timeline for converting a secured credit card to an unsecured one, or “graduating,” varies by issuer and individual credit history. Generally, issuers review your account for an upgrade after a period of responsible use, often six to 12 months of consistent, on-time payments and low credit utilization. Once reviewed and approved, the conversion process itself is usually quick, and your security deposit will be returned.

Does converting a secured credit card to an unsecured card hurt your credit score?

If you upgrade from a secured to an unsecured card with the same issuer, it generally does not hurt your credit. This process, known as “graduating,” usually involves keeping the same account open, which preserves your credit history (age of account). Your security deposit is returned, and your credit limit may increase.

Do all credit card issuers allow the conversion from a secured to unsecured card?

No, not all credit card issuers allow the conversion from a secured to an unsecured card. This process, often called “graduating,” depends entirely on the specific issuer’s policies and the card product. Some major card issuers offer clear paths for conversion after a period of responsible use (typically six to 12 months), allowing you to keep the same account and get your deposit back. Other issuers may require you to apply for a new unsecured card. Always check with your current card issuer to understand their graduation options.

---

Photo credit: iStock/Ridofranz

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOCC-Q126-048