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Compare secured credit cards vs. prepaid debit cards

Get traditional flexible spending with less financial risk.

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Secured credit cards and prepaid debit cards are two of the most popular and available alternatives to credit cards. Both provide the same freedom as a credit card, but without the risk of falling into debt. They can be used to build credit, pay for everyday expenses or can be used as a stepping stone to an unsecured credit card. Here’s everything you need to know about secured credit cards and prepaid debit cards.

Our pick for a secured credit card

OpenSky® Secured Visa® Credit Card

  • No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
  • The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
  • Build credit quickly. OpenSky reports to all 3 major credit bureaus.
  • 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
  • We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
  • OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
  • *View our Cardholder Agreement located at the bottom of the application page for details of the card.
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Secured credit cards vs. prepaid debit cards

While secured credit cards and prepaid debit cards may seem very similar in theory, there are actually several major differences. Here’s a quick rundown of a few of the main features that separate the two:

Secured credit cardsPrepaid debit cards
Deposit is collateral and your spending limitDeposit is your spending limit
Annual, transactional and maintenance feesActivation, withdrawal and deposit fees
Interest charges on monthly balanceMonthly service charges
Build credit as you use the cardDoesn’t build credit
Funding through bank accountMultiple funding options
Can be used almost anywhereLimited online use and access
Interest and fees on cash advancesATM balance inquiry fees
Rewards programs and card benefitsGuaranteed approval
Only available through financial institutionsNo bank account required

What is a secured credit card?

Secured credit cards offer the advantages of an unsecured credit card even if you have poor credit. The main difference between secured and unsecured credit cards is that secured cards require a deposit that often serves as your credit limit.

How do secured credit cards work?

Secured credit cards work similarly to unsecured credit cards. The primary difference is you’ll need to provide a security deposit in order to obtain a secured card.

Unsecured credit card issuers rely on your credit history as assurance that you’ll pay off your purchases. With secured cards, however, your deposit acts as collateral. Secured credit cards are easier to be approved for — especially for those with limited or poor credit.

When are secured cards better than prepaid debit cards?

Secured credit cards allow you to use the lender’s money on credit with the promise to pay it back later. The greatest advantage secured cards have over prepaid cards is that it helps you build your credit score as you use it.

Secured credit cards also offer more flexibility in your spending, and some offer rewards programs, benefits and other perks that aren’t available on prepaid debit cards.

Pros and cons of secured credit cards

ProsCons
  • High approval rates
  • Build credit with no risk of debt
  • Can be used anywhere
  • Refundable deposit that may earn interest
  • Flexibility in spending
  • Upfront deposit
  • Better cards may have lower fees
  • Low credit limits
  • Lack of rewards programs
  • Higher APR
  • Approval is not guaranteed

Compare secured credit cards

Name Product Filter values Minimum deposit required Purchase APR Annual fee Recommended minimum credit score
OpenSky® Secured Visa® Credit Card
Starting at $200
17.39% variable
$35
300
Apply for this card with no credit check if you're new to credit or have bad credit.
Assent Platinum 0% Intro Rate Mastercard® Secured Credit Card
Starting at $200
0% intro for the first 6 months (then 12.99% variable)
$49
300
A rare secured card with a 0% intro APR on purchases for 6 months, followed by 12.99% variable.
First Progress Platinum Elite MasterCard® Secured Credit Card
Starting at $200
19.99% variable
$29
300
Build your credit with all three major credit bureaus.
Applied Bank® Secured Visa® Gold Preferred® Credit Card
Starting at $200
9.99% fixed
$48
300
No credit check is required for this secured card. Make a deposit of at least $200 to open this card and get a low 9.99% fixed APR on purchases.
Self Visa® Credit Card
Starting at $100
21.74% variable
$25
300
Build your credit with a low minimum security deposit of $100 and no credit score required.
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What is a prepaid debit card?

Prepaid debit cards are not linked to your bank account. Instead, you load money onto the card and once it runs out, you can either load more or get a new card. There are no credit limits, monthly bills or interest charges like a credit card, but you’ll still be able to use it anywhere you’d use a standard debit card.

How do prepaid debit cards work?

Unlike standard debit cards and credit cards, you won’t need to go through a financial institution to get a prepaid debit card. Prepaid debit cards can be purchased at grocery stores, pharmacies, corner stores and a handful of other locations, making them much easier to get. Once you’ve obtained a card, there are a number of ways you can load money onto it:

  • Through a financial institution via cash, check or transfer
  • Direct-deposit paychecks onto your card
  • Online: PayPal, Interac or bank transfer
  • Reload it at a retail store like Walmart or Walgreens
  • Buy a reload card such as Vanilla, Green Dot or MoneyPak

Once your card is loaded, you can use it to make purchases anywhere you’d use a normal debit card. This includes goods and services at retail locations and even online bill payment for some cards.

Pros and cons of prepaid debit cards

ProsCons
  • Controlled spending
  • No overdraft fees
  • No credit check required
  • No bank account needed
  • No interest charges
  • Keeps your money safe
  • Doesn’t build credit
  • No rewards programs or benefits
  • Undisclosed service charges
  • Activation, withdrawal and deposit fees
  • Limited online purchases
  • Less security if lost or stolen

When are prepaid debit cards better than secured credit cards?

Prepaid debit cards and secured credit cards are very similar in that they both provide a means to manage your spending. While secured credit cards offer more flexibility in your spending, they may promote bad habits since you aren’t actually spending your own money.

Prepaid debit cards encourage responsible spending and budgeting, and offer a secure way to manage your cash without a bank account. However, you’ll want to look for a low-fee prepaid debit card in order to cut back on the associated fees.

Compare prepaid debit cards

Name Product ATM withdrawal Annual or monthly fee Features
Greenlight
$0
$4.99 per month
  • Allowance payouts
  • Usage notifications
  • Parent-paid interest
Greenlight is the prepaid debit card for kids that parents manage from their phones with flexible parental controls.
BusyKid
$19.99 per year ($1.67 per month) includes free card; $7.99 per year ($0.67 per month) for additional cards
  • High load limits
  • Invest in real stock
  • Donations to 30+ charities
The BusyKid Visa® Prepaid Spend Card gives your kids the freedom to spend anywhere Visa® is accepted, and parents see every transaction made.
ACE Flare Account
$2.50
$9.95 per month (or $5 with a $500+ direct deposit)
  • Earn interest on your Flare Account
  • Optional Debit Card Overdraft Service
  • Get paid up to 2 days faster with Direct Deposit
Withdraw up to $400 in cash per day without a fee at participating ACE locations when you have qualifying Direct Deposit activity.
FamZoo
$0
$5.99 per month
  • Free trial
  • Real-time requests
  • Parent-paid interest
Teach your children good money habits with this comprehensive prepaid card and account.
Brinks Prepaid Mastercard
$2.50
$9.95 per month (or $5 with a $500+ direct deposit, or $0 with pay-as-you-go)
  • Mobile app
  • Direct deposit
  • Payback rewards
No credit check. No minimum balance. No late fees because this is not a credit card.
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Bottom line

If you’re looking to improve your credit, secured credit cards are often the best choice. However, if you’re just looking for a way to manage your finances, prepaid debit cards offer most of the benefits of a standard debit card without a bank account.

As with any major financial decision, you should always weigh your options to find a product that best suits your needs. Learn more about how credit and debit cards are different, or explore secured credit cards and prepaid debit card options, then apply for the card that’s right for you.

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