Should Consumers Upgrade Secured Cards to Unsecured Cards?

This will likely depend on what your main objective was when you first acquired the secured credit card. Many consumers who get a secured credit card typically are looking to boost their credit score and establish bigger and better lines of credit later down the line. As a savvy consumer you might have a desire to keep your credit card secured since it will positively impact your credit diversity in the long term, however, the decisions ultimately remain yours. You don’t have to convert it into an unsecured card if you don’t want to.

How Long Have You Had the Secured Card for?

It’s important to see where you are on the timeline of going from a secured credit card to an unsecured credit card. If you’ve had the secured card for 9 -12 months or longer, now might be as good a time as any to try and make this transition. If your goal is to acquire a “regular” credit card simply because you don’t have one this, this might be the right option for you. If your goal is to continue diversifying your credit history in the long term you should look to retain the secured credit card so that you will continue to see the boost to your credit score.

Demonstrated Payment History

Payment history is the most important factor that ranks into you upgrading your secured credit card. It’s more important than any macro-economic factors and loosening or tightening of lending parameters. The payment history you’ve demonstrated while using that secured credit card is going to be the most important decision in whether you can successfully convert your secured card into an unsecured card.

Financial Data

Financial data has become much more precise and creditors seem to be more efficiently evaluating “good credit risks” ever since the pandemic of 2020. So, if you’ve responsibly displayed good credit habits since opening the secured card, now is as good a time as any to upgrade to an unsecured card. Financial data is much more accurate and as long as you’ve been doing your part and keeping your utilization low your odds for success are quite high. However, it’s important to bear in mind that you don’t have to upgrade the card if you don’t think it’s in your best interests. If you have your eye on another credit card it could also be prudent to wait for the credit card you really want.

Tightening Credit

It appears as we will be heading into a period of quantitative easing in the near future as the economy is currently slowing. Due to tightening of credit, now is as good a time as ever to make long term plans to boost your credit if you want to have good credit in the intermediate term

Although there is still a good deal of economic uncertainty ahead and credit opportunities in the intermediate term could change at the drop of a dime, you should still hope for the best but prepare for the worst. If you feel credit opportunities could potentially be in short supply make the transition to an unsecured card. If you feel that credit opportunities will be okay you can try waiting for the better credit card.