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Secured vs. unsecured credit card

Secured and unsecured credit cards aren’t all that different, but one is easier to get.

Most credit cards you’ve heard of are probably unsecured, meaning they don’t have any collateral backing up the line of credit. The main difference between an unsecured and a secured credit card is that secured cards have collateral, usually in the form of a cash deposit.

What is a secured credit card?

A secured credit card is a line of revolving credit that requires a security deposit, typically a cash deposit. Other than the collateral, secured credit cards work the same as regular credit cards. With both cards, you have a set credit limit you can spend up to, and you repay what you borrow. If you don’t pay off the balance before the billing cycle is over, your owed balance accrues interest. This interest usually has an APR above 20%.

A secured credit card’s security deposit usually sets your credit limit, too. For example, if you make a $200 deposit, your secured card’s credit limit is likely $200. If you can’t repay your balance, the deposit covers the debt. The security makes these cards less of a risk to lenders and, in turn, also makes them easy to qualify for if you have a less-than-ideal credit history.

Most secured cards have low credit score requirements, often below 670, or the bank may not check your credit score at all. Thanks to their lax requirements, secured credit cards are often someone’s first credit card. These cards are great for students and young adults, new borrowers or those who want to improve their credit.

Do all secured credit cards require a cash deposit?

Most secured cards require a security deposit, usually a minimum of $200. However, some cards have low or no deposit requirements, such as the Capital One Platinum Secured Credit Card, which lets you make a security deposit as low as $49.

Some secured cards skip the cash deposit and require a linked bank account instead, such as the Fizz card or the Current Build card. With those cards, the credit limits are set by what you currently have in your linked deposit account, and the owed balance is repaid automatically. And because the balance is repaid each month, there are no interest charges.

At a glance: Secured vs. unsecured credit card

FeaturesSecured credit cardUnsecured credit card
Credit score requirementsNone, or may accept scores under 670Often 670+ credit score
Requires deposit or collateralYesNo
Builds credit historyYesYes
Offers rewardsSometimesOften
Credit limit increases offeredSometimes, usually through an upgrade to an unsecured credit cardOften

Do secured credit cards build credit?

Yes, secured cards build credit history just like regular credit cards. Credit cards impact every main part of your FICO credit score:

  • New credit. If there’s a hard credit check when you apply for the secured card, you may see a dip in your credit score thanks to the category “new credit,” which keeps track of how often you apply for a new loan or line of credit.
  • Payment history. The biggest factor in your credit score, so making your credit card minimum payments on time, every time, can improve your credit score. However, missing payments can drastically lower your credit rating.
  • Amounts owed. This category keeps track of your credit utilization ratio, which is how much you owe versus your total credit limits. The lower your credit card balances are, the better off your credit score can be.
  • Credit mix. This category factors in the types of credit you have active, such as installment loans and revolving credit, and secured credit cards fall under revolving credit. Having a good credit mix can improve your credit rating.
  • Length of credit history. Having a long credit history matters. The older your accounts are on your credit report, the higher your credit score can be. Opening a new credit card can lower your credit score temporarily, and closing accounts can also lower your credit rating.

Applying for a secured credit card

Applying for a secured credit card is similar to getting an unsecured card. You can apply for a credit card online, and you must be at least 18 years old and prepared to provide the following information:

  • Full name and date of birth
  • Home address
  • Social Security number or ITIN
  • Gross income and possibly proof of income
  • Contact information, such as phone number
  • Cash deposit, if required

Upgrading to an unsecured credit card

Some secured credit cards offer the ability to upgrade to a regular, unsecured credit card down the line. Typically, upgrading to an unsecured credit card doesn’t involve fully reapplying or a hard credit check, but this can vary by bank.

You might be able to contact the credit card company and ask to upgrade, or they’ll offer it after a few months of good repayment history and low utilization. For example, the Discover it® Secured Card evaluates your last seven months of repayment history to see if you’re eligible to upgrade and earn your deposit back.

Compare top credit-building cards

Narrow down top credit-building cards by monthly fees, APRs and features. For a better comparison, select the Compare box on up to four options to see benefits side by side.

1 - 5 of 15
Name Product Fee Minimum deposit to open Requirements Credit Bureaus Offer
Chime® Credit Builder Secured Visa® Credit Card
Finder Score: 5 / 5: ★★★★★
Chime® Credit Builder Secured Visa® Credit Card
$0 per month
Must have a Chime Checking Account with eligible direct deposits to qualify.
Equifax, Experian, TransUnion
A secured credit card that helps build credit and is designed to work with Chime’s Checking account.
Step Black Card
Finder Score: 4.3 / 5: ★★★★★
Step Black Card
From $0 per month
Step users who are 13 years or older
Equifax, Experian, TransUnion
Safely build credit without a credit check or credit history while earning savings rewards and cashback.
Extra debit card
Finder Score: 4.3 / 5: ★★★★★
Extra debit card
From $20 per month
Requires an existing bank account.
Equifax, Experian
The Extra Debit Card can help build your credit and even offer rewards on every purchase.
Cleo Credit Builder Card
Finder Score: 4.4 / 5: ★★★★★
Cleo Credit Builder Card
$14.99 per month
Requires bank account
Equifax, Experian, TransUnion
A secured credit card designed to help build credit with up to a $500 cash advance
Ava Card ‍Build Credit
Finder Score: 4.2 / 5: ★★★★★
Ava Card ‍Build Credit
From $9 per month
Requires bank account
Equifax, Experian, TransUnion

Bottom line

Secured credit cards can be great starter cards or a good way to get into the world of borrowing. They have low credit score requirements and lower credit limits and may even let you upgrade to a regular card with a good repayment history.

Compare secured cards with no deposit here, or if you’d rather get a regular credit card, explore the best credit cards.

Alexa Serrano Cruz's headshot
To make sure you get accurate and helpful information, this guide has been edited by Alexa Serrano Cruz as part of our fact-checking process.
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Written by

Editor, Banking

Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto. Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt. Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others. Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio

Bethany's expertise
Bethany has written 392 Finder guides across topics including:
  • Personal finance
  • Banking
  • Auto loans
  • Insurance
  • Cryptocurrency and NFTs

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