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Compare secured credit cards vs. prepaid debit cards

Get traditional flexible spending with less financial risk.

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Our pick for a secured credit card: Self Visa® Credit Card

Self Visa® Credit Card logo

from $100

Security deposit

  • Apply with any credit score
  • Pair with a Credit Builder Account to build your credit score and savings
  • Low annual fee for a secured card
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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.

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 cards Prepaid debit cards
Deposit is collateral and your spending limit Deposit is your spending limit
Annual, transactional and maintenance fees Activation, withdrawal and deposit fees
Interest charges on monthly balance Monthly service charges
Build credit as you use the card Doesn’t build credit
Funding through bank account Multiple funding options
Can be used almost anywhere Limited online use and access
Interest and fees on cash advances ATM balance inquiry fees
Rewards programs and card benefits Guaranteed approval
Only available through financial institutions No 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

Pros Cons
  • 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.
OakStone Platinum Secured Mastercard®
Starting at $200
9.99% variable
$49
300
Build credit and enjoy an ultra-low APR on purchases of 9.99% variable with this secured credit card.
OakStone Gold Secured Mastercard®
Starting at $200
13.99% variable
$39
300
A secured credit card to help you build credit with a low APR on purchases of 13.99% variable.
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.
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.
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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

Pros Cons
  • 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 Annual or monthly fee ATM withdrawal Features
Netspend Prepaid Mastercard, WWE partner
$9.95 per month (or $5 with a $500+ direct deposit, or $0 with pay-as-you-go)
$2.50
  • No activation fee
  • Payback rewards
  • No minimum balance required
No credit check, mobile check load, and now a WWE partner
PayPal Prepaid Mastercard
$4.95 per month
$1.95
  • Manage money on the fly
  • Receive special offers and cash back rewards
  • Get your state and federal tax refund faster than a paper check
Use the no-cost direct deposit service and have access your funds up to two days faster than what traditional banks offer.
 Netspend All-Access Account by MetaBank
$5 per month
$0
  • Earn cash back on everyday purchases
  • Earn up to 6% APY with an optional Savings Account
  • Receive your paycheck up to 2 days earlier with Direct Deposit
With Netspend All-Access Account by MetaBank there's no credit check and no minimum balance to open an account.
NetSpend® Visa® Prepaid Card
$9.95 per month (or $5 with a $500+ direct deposit, or $0 with pay-as-you-go)
$2.50
  • No transaction fees
  • $5 per month with a $500+ direct deposit
  • Trusted by more than 7 million people
With Netspend, you get a convenient way to manage your money on a prepaid card that is packed with features.
Brinks Prepaid Mastercard
$9.95 per month (or $5 with a $500+ direct deposit, or $0 with pay-as-you-go)
$2.50
  • 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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