Secured vs Unsecured Credit Cards

What is a secured credit card? If you are unfamiliar with this term, you’re not alone! Secured credit cards are a great option if you have a credit score in the lowest range, or if you have a “thin” credit file. With a secured credit card, you can create good credit skills and build your score with the credit bureaus over time.¹


Here are the main differences between secured and unsecured credit cards.

Unsecured Credit Cards 

Unsecured credit cards are the most common cards. They are what most people typically think of when they hear “credit card.” How do unsecured cards work? When you are approved, you are extended a credit limit by the card issuer with no deposit required.


The credit card comes with a specified APR, or annual percentage rate. This is the percentage of interest you pay on any balance you carry. There may also be annual fees associated with the card. Unsecured cards often require a good credit score and credit history.

What is a Secured Credit Card?

A secured credit card functions in most of the same ways as an unsecured card. The main difference is that you make a refundable security deposit in order to get the card. This security deposit typically is the amount of your credit limit. Deposits usually start in the low hundreds of dollars. Your deposit protects the card issuer if you default on payments. So, your deposit is refundable when you have paid any outstanding balances and you close your account in good standing.

Secured vs Unsecured Credit Cards

When it comes to secured vs unsecured credit cards, secured credit cards have lower risk to the card issuer. This means they are easier to qualify for. If you have less-than perfect credit or limited (or no) credit history, you may want to consider a secured credit card.


Before signing up for a secured credit card – or a credit card of any sort – it is important to understand the terms, fees, and interest rates. Things to identify are program fees, annual fees, and APR (Annual Percentage Rate). These are all common factors with credit cards, but things to be aware of so that you don’t encounter any surprises.

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