Short video response from Ramit Sethi answering a viewer (Edgar, El Paso) about moving from a secured to an unsecured credit card. Ramit explains the difference (secured as 'training wheels'), recommends 6–12 months of on-time payments before graduating, suggests switching issuers if the current company won't upgrade, and points viewers to student or rewards cards as alternatives.
I got this question from Edgar in El Paso, Texas. He writes, I'm just starting to build my credit history. I have a secured credit card with a $500 limit and I've had it for two years and I've always paid it on time. About a year ago I called to see if they could give me an unsecured card. Instead. The answer was no for some BS sounding reasons. How can I negotiate with them so they'll give me an unsecured credit card? Alright, so let me first explain the difference between an unsecured and a secured credit card. A secured credit card is basically a training wheels credit card. A lot of times when people are very young, let's say they're in college, they go to apply for a credit card and the credit card companies like F you. Why would I give you a credit card? You have no credit history at all. You're too big of a risk. So what you can do instead is get a secured credit card. You basically put like 500 or $1,000 down and over time you will charge something, you'll pay it off and the credit card company will say, alright, this person's trustworthy. Finally, they will graduate you to an unsecured credit card where you don't have to put money down, but they basically just trust you. So here's the thing. If you cannot get a credit card because you're really young, you have no credit history, then getting a secured credit card is a great thing to do. That's what Edgar has done. But you should not have to spend two years in purgatory waiting for some guy from on high to grant you the ability to get an unsecured credit card. That's ridiculous. I would say it should take you about 6 to 12 months to get one. Now I'm not surprised they gave you some BS sounding reason. Financial companies love to BS you as they're picking money out of your damn pocket. However, what you can do is simply go to a different credit card company. My guess is you did this with a bank. I generally hate banks for credit cards. I would go find a better credit card. There's some very good ones. And when you're starting off, you can find student cards. If you're that young, you can also find rewards cards which I really love. You can search on Google for my favorite credit card, ramit and you'll see the actual rewards credit card that I love and you can check it out there. So basic message to you, if you can't get a credit card, start with a secured credit card. Give yourself 612 months. Make sure you're paying it off on time, every time, and then you should be able to graduate. If the company refuses to give you an unsecured card, go find another company. There's plenty of fish in the sea. Thanks a lot.
