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Secured vs Unsecured Credit CardWhat’s the fastest way to build a great credit score?

A credit card.

Well, how do you get one of those?

By having good credit.

Therein lies the catch-22 of it all.

If you’re in that precarious stage of life where you’re trying to build or rebuild your credit, you’re very familiar with this paradox. You may have also come across the terms secured and unsecured credit cards and wondered about the difference.


Both cards come with their own unique benefits and inherent risks and both cards service people in specific situations. Secured cards, for instance, are great for people with short credit histories and individuals with low credit scores who need a way to rebuild credit without slipping into more debt.

In this post, we’ll explore the differences and the things you need to know about secured vs unsecured credit cards and the best circumstances to use either of them. The same goes for having a physical or virtual credit card, but we're not going to discuss that here.

What Are Secured Credit Cards?

A secured credit card is a credit card that is backed by a cash deposit, usually of about $200 or more. Once you’re approved for the card this deposit becomes the collateral for the entire account.

In the credit industry, people with no credit or bad credit are a little risky, which is why unsecured cards are generally not an option for them. To reduce the amount of risk, secured credit card issuers use your deposit as collateral.

If you fall behind on the bill, they can recoup the funds from your deposit, allowing them to safely operate their business. But what does this mean for you? In a nutshell, it means you can’t fall into any significant amount of debt.

The limit on secured credit cards is typically the amount of the deposit, limiting the amount of money you can charge to the credit card as well the amount of money you can owe. Secured credit cards are a controlled way to build or rebuild a credit score.

You don’t have to stick with this option forever, though. Many secured credit card issuers also offer unsecured credit cards and will allow you to upgrade once you qualify for unsecured credit.

Not every issuer offers this opportunity, however. Should you find yourself with one that does not, you can close the secured credit card and apply elsewhere for an unsecured option.

As long as the account is in good standing and you’re non-delinquent, you’ll have your deposit refunded to you.

Secured vs Unsecured Credit CardQualifications

As expected, secured credit cards are a bit easier to obtain are known to have qualifications that are generally less strict than unsecured credit cards.



It is inherently less risky for credit card providers to provide services to secured credit card holders. Consider this, if someone gave you $200 to hold, would it be risky for you to loan them $50 when they needed it. Of course not. That’s essentially how secured credit card providers operate.

If you have a credit score of 300+, you can get a secured credit card without much hassle. As long as you can afford the cash security deposit, you’re off to the races.

An unsecured credit card, on the other hand, doesn’t require a cash deposit. It does require a healthy credit score and great track record of paying your debts on time, in full.

If you’re looking for unsecured credit, providers need to see you’re good for it.

How secured credit cards work

Day to day, there isn’t much of a difference in how either credit card works. They both complete the same basic functions without much deviation. In the case of a secured credit card, you just have to pay the cash deposit first.

Once your deposit is paid, there are all kinds of neat little things you can do with your card. You can:

  • Use your card in any store that accepts your card as well as online retailers.
  • Rebuild your credit by paying your balance in full, and on time.
  • Rack up interest if you carry a balance, just like you can with an unsecured card, so be careful.

They also have annual fees. These are common among both secured and unsecured cards, but it’s rare to find a secured card that will charge you more than $50 annually. You can also find secured cards that don’t charge an annual fee at all. That’s totally possible, you just have to shop around a bit.

While it is much harder to slip into debt with a secured card, you still don’t want to be careless. As with anything else that shows up on your credit report, you want to be as responsible as possible.

If you honor it as a low-cost loan or bill, it becomes a great tool to use when rebuilding credit. Speaking of rebuilding credit…

Rebuilding credit with secured credit cards

Sure, they require a deposit. This isn’t ideal, but neither is a low credit score. The bottom line is a secured credit card is the best hammer you can use to rebuild your credit. There's a funny thing about hammers, though. You can nail a picture to a wall or you can crush your thumb, all with the same hammer.

Like any tool, there’s a right way and a wrong way to use it. That’s even truer when the tool is a secured credit card. Don’t get me wrong, you don’t need to throw the card into a block of ice with directions to break in case of emergency.

Nothing quite that drastic needs to happen. From a practical standpoint, you won’t rebuild your credit like that either. However, that doesn’t mean there aren’t rules and parameters you need to set for your credit card usage. Here are 3 effective rules to keep you and your secured credit card on the straight and narrow:

  1. Pay your balance off in full before the due date. The idea is to avoid interest rates. They’re higher on secured cards than on unsecured cards. Also, this builds a great habit and a great credit score.
  2. Be conservative. Liberal usage of the card is not encouraged. Make only a few small purchases over the course of the month. You should be able to count them on one hand and you shouldn’t need all 5 fingers. This is more than enough to establish a reputation with any credit card provider. No, they won’t call you a cheapskate. They will consider you someone who pays their bills on time and that’s what you want.
  3. Watch your score. When your credit score makes a significant improvement you can ask your credit card provider about upgrading to their unsecured option if they offer one.

If you’re using your card this way, most people find that it doesn’t take more than a year to make a significant improvement on their credit score. The main point to remember is that secured cards offer a lot of security on the road back to healthy credit.

By making it extremely difficult for you to default on payments, secured cards become the go-to option for anyone looking to rebuild credit.

How to open a secured credit card

We’ve talked about this, but we’re going to talk about it one last time.

Your cash deposit.

If you’re like me, you hate giving money away. But if you want to open a secured credit card, you’re going to need to bring your cash deposit with you and you’ll need to be ready to hand it over.

Seriously…say your tearful goodbyes in the car.

There is a silver lining, though. If you use your card well and you don’t stick your credit card provider with any unpaid bills, they won’t need to take it out of your deposit. Meaning you’ll get it back in full once you close the card.

So you’re not really giving away money, you’re just letting someone hold onto it for a year or so. That’s not quite as painful, right?

Secured vs Unsecured Credit Card

What Are Unsecured Credit Cards

What is it?

Most people think of these when they think of credit cards at all.

Unsecured credit cards are not dependent on deposits. Instead, the limit is decided by your payment records and your credit score. They also have a lower interest rate than secured credit cards.

Unsecured credit cards are ideal because they offer a lot more freedom to the credit card holder. That freedom can work against you, though. For that reason, unsecured cards are best used by those with experience and good credit/spending habits.

Unsecured cards make it extremely easy for inexperienced credit users to dig themselves into a hole of debt.


As mentioned, the main qualification for a secured credit card is a deposit and your limit will be equal to that. Unsecured cards are much harder to obtain and the qualifications are much loftier.

Let’s start with the credit score. The requirement for most unsecured cards is a credit score of about 640+. That alone knocks a lot of people out of the running for one, but that isn’t all. You’re also required to make a personal guarantee.

That may not sound like a big deal, but it isn’t as simple as you think. You’re personally guaranteeing to repay your debt and giving your credit card provider explicit permission to come after your personal assets should you ever fail to do so. It’s a bit more a commitment than a secured card, to say the least.

How unsecured credit cards work

Just because there are no collateral requirements, doesn’t mean you’re out of the woods, yet.

Unsecured cards are generally more costly and risky. It’s very common to see annual fees as high as $100 and interest rates at around 36%. Providers also reserve higher interest rates and annual fees for riskier credit card holders in lieu of a cash deposit.

Basically, the better your personal credit record, the more favorable the conditions that come with your card. Someone with a very high credit score will usually have access to credit card options that present them with much lower interest rates and annual fees.

The moral to the story: risk is costly.

Secured vs Unsecured Credit Card

Rebuilding credit with unsecured credit cards

Could you use an unsecured credit card to rebuild credit?


Although, the very fact that you were able to get an unsecured credit card usually means your credit is already somewhat healthy. You can definitely raise your score, however. You just have to be extremely careful about it.

Unsecured cards don’t have the same built-in safety that secured cards have. With no guard rail to knock up against, you could wind up killing your credit score if you can’t keep up your payments, or the interest that comes with them.

But it isn’t all bad. Unsecured card holders are believed to be more reliable, so there are perks and rewards that come with unsecured cards that you won’t often find in secured cards. There are also opportunities to obtain higher credit limits as well, provided your account is in good standing.

How to open an unsecured credit card

You need an average to excellent credit score to open your unsecured card. If you’re on the less-than-ideal end of that spectrum, you can count on higher fees, higher interest rates, and fewer rewards.

Once you get the card, you can always increase your credit score and work your way into your credit card provider’s good graces.

Final Thoughts

Everyone always wants to know which is the best credit card.

There’s no such thing.

All you can hope to find is the best card for your current circumstance.

Secured cards are great for establishing credit or rebuilding it completely. Unsecured cards are phenomenal if you’re looking for higher limits, more rewards, and all the freedom you can handle.

Before applying for any credit card, though, you should always look to make sure you’re applying for one that’s right for you.

You want to look at your current financial circumstances and figure out which card or credit card provider can help you get closer to your individual financial goals. Approach it that way and you’ll be on the road to great credit in no time.


General Secured Credit Card Questions

This section answers general questions about secured credit cards. Use it to get a basic understanding of these important financial products.

Can I add more money to my secured credit card?

That depends on your specific credit card and some other factors. Many companies give you a window of time to deposit money to add to your credit limit.

Can you upgrade a secured credit card?

Oftentimes yes, but you’ll need to check with your credit card company to find out how it works for them and what the requirements are.

What is the easiest secured credit card to get?

Almost any secured credit card company will offer you a card if you can meet their minimum deposit. We recommend trying Blue Sky, as they don’t even require a credit check.

Can you be turned down for a secured credit card?

Yes, any business can turn down an application for a credit card. However, it’s extremely uncommon for this to happen.

Can a secured credit card become unsecured?

In many cases, yes. However, each company has their own policies regarding how this can happen, so you’ll need to check with your card issuer for more details.

Can I get a secured credit card with bad credit?

You can get a secured credit card with bad credit. In fact, one of the most common uses of a secured credit card is to help people with bad credit rebuild their credit history.

Can you get a secured credit card without a job?

In most cases, yes. You’ll just need to make the minimum required security deposit for the credit card.

Do secured credit cards check your credit?

Most secured credit cards don’t check your credit. However, some do. You’re more likely to get a credit check on a secured card from a major bank than a specialized secured credit card company.

Secured Credit Cards from Specific Companies

Lots of different companies offer secured credit cards. We’ll answer your questions about some of the more popular ones in this section.

Does Regions Bank offer a secured credit card?

Yes, Regions Bank has a secured Visa. However, you must have a Regions savings account to qualify, as the funds are secured by this account. Also check out the top CD rates while you're at it.

Does Wells Fargo business secured credit card report to bureaus?

Yes, every credit card company reports payment activity and credit card balances to the credit monitoring agencies.

How does Discover secured credit card work?

The Discover credit card is pretty easy to understand. You apply for the card, and, when you’re approved, you’ll be given a window to make a security deposit. Once you’ve made your deposit, your credit limit is set and you’ll receive your card.

Does Capital One secured credit card report to credit bureau?

Yes, Capital One secured credit card reports to the credit bureau regarding your total available credit, credit used, and payments.

Does PNC bank offer a secured credit card?

PNC has a secured Visa card with no application fees or other hidden fees. It’s designed to help new customers establish a credit history.

How to add money to USAA secured credit card?

You can add to your USAA secured credit card limit by adding funds. You can achieve this by logging in to your account on their website. You must add at least $50 each time you add funds to your account.

Secured Credit Cards and Credit Scores

This section answers your questions about secured credit cards relate to your credit score.

Do secured credit cards ruin your credit?

Secured credit cards affect your credit score the same way that unsecured cards do. – if you pay your balance off each month and on time, then your credit score will go up.

Does having more than one secured credit card help?

It depends on your specific situation. Having more than one secured credit card will increase the number of payments you make, which can help move your score up faster, depending on your credit history.

How fast can a secured credit card build credit?

That depends on lots of different factors, most importantly what other things are on your credit report. You’ll need to talk to a credit repair expert to get more information about your specific situation.

How to rebuild credit with secured card?

It’s easy to rebuild your credit with a secured card. You just need to make sure to pay off your entire balance each month. This will keep your credit utilization low and will add on-time payments to your report. Another option is secured loans which we talk about in our Self Lender review.

How to use a secured credit card to build credit?

You can build credit with a secured credit card by making sure you never carry a balance on it and always make your payments on time.

How many points does a secured credit card give you?

There’s no single answer to this question, as it depends on lots of other aspects of your credit history. A credit repair expert can give you more information about your specific situation.

Using Secured Credit Cards

We’ll cover the most common questions people have about secured credit cards in this section.

When do I get my secured credit card deposit back?

Every company has a different policy about when they return your security deposit. You’ll need to check the terms of your agreement or contact your company to get this answer.

Can I add someone to my secured credit card?

In most cases, yes. You’ll need to check with the company that issues your card to find out the process to add someone to your account.

Can you rent a car with a secured credit card?

You shouldn’t have a problem renting a car with a secured credit card as long as it is from a major payment network and has enough available balance to cover your expense.

Can you get a secured credit card at 17?

You can’t get a credit card in your own name at 17. You can only get a credit card as an authorized user on someone else’s account until you’re 18.

How much should I deposit on a secured credit card?

That depends on your financial situation and plans. A larger deposit will cause your credit report to show more available credit, while a smaller one means that you can be more confident that you can pay off the whole balance each month.

General Questions About Unsecured Credit Cards

This section answers general questions about unsecured credit cards. It will give you a good foundation to understand how these types of credit cards work.

What is an unsecured credit card?

An unsecured credit card is a credit card that you get without putting any money down to secure your line of credit. The company is trusting on good-faith that you’ll repay your bill.

How to get unsecured credit card with no credit history?

There are several companies that will offer you an unsecured credit card with no credit history. Check with your bank, as most banks will have starter unsecured credit cards they offer to customers.

How to get an unsecured credit card with poor credit?

It can be difficult to get an unsecured credit card with poor credit. Your best bet is to build your credit history with a secured card before you try to get an unsecured card.

What is an unsecured credit card for bad credit?

The Credit One Bank Platinum Visa is one option for an unsecured credit card with poor credit. There’s a $300 minimum credit limit on the card. If you repair credit score issues then you could perhaps qualify for better cards.

What is the best unsecured credit card?

That depends on what you’re looking for. The Chase line of credit cards are some of the best options for people looking for travel bonuses, while Capital One credit cards are better for people that have light credit histories and want to get cash back.

How do unsecured credit cards work?

Unsecured credit cards work by way of an agreement. The company gives you the card, the credit limit, interest rate and fee information. You agree to pay at least the minimum balance on your bill as well as any interest charges.

How to apply for an unsecured credit card?

You can apply for an unsecured credit card online. We recommend using a credit card search site to see what credit cards might be best for you.

What unsecured credit card is the easiest to get?

That depends on your situation. One of the best unsecured credit cards for rebuilding credit is the Credit One Bank Platinum Visa. It’s really easy to get and doesn’t require a deposit.

When should I apply for an unsecured credit card?

You should apply for an unsecured credit card when you feel comfortable that you’ll be able to pay your bill on time each month and control your spending on the card.

Can I get an unsecured business credit card?

Your business can get an unsecured business credit card. You should talk to your bank about what steps you’ll need to take to get your card.

Can my first credit card be unsecured?

Yes. Many people get an unsecured credit card as their first card. These cards usually have a lower credit limit, but you can use them to build your credit to get a better card.

Unsecured Credit Cards and Specific Companies

We’ll cover specific company’s unsecured credit cards in this section.

What is Horizon Gold unsecured credit card?

Horizon Gold isn’t a traditional credit card. It’s more like a store card that requires you to pay your bill in full each month. You should probably look elsewhere for a credit card.

How long before Wells Fargo secured credit card is unsecured?

Wells Fargo doesn’t have a set period of time before your secured card is upgraded to an unsecured card. You’ll need to apply with them and receive credit qualification for the upgrade.

Is Best Buy credit card secured or unsecured?

The Best Buy credit card is unsecured. You don’t put down any kind of deposit on the account when you open the credit card.

Can you use Total Visa unsecured credit card anywhere?

You can use the Total Visa unsecured credit card anywhere that accepts the Visa payment network.

Does Chase have unsecured credit cards?

Yes. In fact, Chase only offers unsecured credit cards. They don’t have any secured credit card products for customers.

Using Unsecured Credit Cards

We’ll answer your questions about using unsecured credit cards in this section.

Can you add money to an unsecured credit card?

Not in the traditional sense. Instead, you can apply for a credit limit increase with your credit card company. If you’re approved, then your available credit will be increased.

Can you use unsecured credit cards on PayPal?

Yes, you can use unsecured credit cards as a payment method on your PayPal account.

Do you pay income tax on unsecured credit cards?

No, available credit isn’t considered income. That means you don’t pay any income tax on unsecured credit cards.

Do unsecured credit cards build credit?

Unsecured credit cards build credit as long as you keep your utilization low and pay your bill on time every month.

Does credit limit go up quickly unsecured cards?

That depends on your situation and your card issuer’s terms of service. Many credit card customers can get a higher credit limit quickly as long as they pay their bills on time and don’t carry a large balance.

Secured vs Unsecured Credit Card Questions

Now that you know all about secured and unsecured credit cards by themselves, we’ll answer the most common questions comparing these two types of credit cards.

What is the difference between secured and unsecured credit cards?

A secured credit card requires you to make a deposit equal to your credit limit before you can get the card. An unsecured credit card gives you a credit account with no security deposit on the trust that you’ll pay your bill.

Do secured credit cards become unsecured?

In many cases, yes. You’ll need to check out the terms of your credit card agreement to see what your options are for getting your deposit back.

How long before a secured credit card becomes unsecured?

There’s no single amount of time it takes for a secured credit card to get upgraded to an unsecure credit card. Each company has their own policies on this, so you’ll need to check with your card issuer.

What secured credit cards report as unsecured?

No secured credit cards report as unsecured. This wouldn’t matter anyway. The things that affect your credit score are credit utilization and on-time payments, not whether a credit card is secured or unsecured.

How to unsecure a secured credit card?

Each bank or card issuer has their own process to upgrade a secured credit card to an unsecured credit card. Check with your account holder to see how this process works in your case.

How to upgrade from secured credit card to unsecured?

You’ll need to contact your card issuer to see how to upgrade your card. Most card issuers require you to have a certain number of on-time payments and/or credit utilization requirements.

Should I get a secured or unsecured credit card?

That depends on your situation and what you need a credit card for. If you’re just looking to build your credit, then a secured credit card is a good option. If you need a card to make a major purchase, then you’ll need an unsecured credit card.

Do secured cards build credit faster than unsecured?

Secured and unsecured credit cards build credit at the same rate, as long as you make your monthly payments on time and keep your balance low or at zero.