{"id":359853,"date":"2021-07-13T11:02:47","date_gmt":"2021-07-13T17:02:47","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=359853"},"modified":"2021-07-13T11:02:49","modified_gmt":"2021-07-13T17:02:49","slug":"secured-vs-unsecured-card","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/credit-card\/secured-vs-unsecured-card\/","title":{"rendered":"Secured vs. unsecured credit cards"},"content":{"rendered":"\n
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Disclosure regarding our editorial content standards<\/em><\/a>.<\/p>\n\n\n\n

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Unlike regular credit cards, secured credit cards require a deposit to use. Typically the deposit you pay to use a secured credit card is equal to your credit limit, which means the lender takes on no risk\u2014if you don\u2019t pay your bill, they simply keep your deposit. On the other hand, regular credit cards are unsecured, meaning that the lender lets you borrow money without a deposit, expecting based on your credit history that you\u2019ll pay them back later.<\/p>\n<\/div><\/div>\n\n\n\n

When you\u2019re deciding between a secured and an unsecured credit card, it\u2019s helpful to think about your own situation. If you\u2019re just starting to build your credit<\/a> or looking to rebuild your credit, a secured credit card could be a great option. On the other hand, unsecured credit cards typically provide higher credit limits and lower interest rates\u2014some even provide rewards or cash back.<\/p>\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n
<\/th>\n Secured credit cards<\/th>\n Unsecured credit cards<\/th>\n <\/tr>\n <\/thead>\n
Cash deposit<\/td>\n Required<\/td>\n Not required<\/td>\n <\/tr>\n
Credit limit<\/td>\n Lower. Usually equal to deposit<\/td>\n Higher, depending on credit score<\/td>\n <\/tr> \n
Interest rates<\/td>\n Higher, often more than 20 percent<\/td>\n Lower, depending on credit score (14\u201320 percent)<\/td>\n <\/tr> \n
Credit check<\/td>\n Often not required<\/td>\n Required.<\/td>\n <\/tr> \n
Fees<\/td>\n Usually<\/td>\n Generally only for rewards cards<\/td>\n <\/tr> \n
Helps to build credit<\/td>\n Yes, if the card issuer reports to credit bureaus<\/td>\n Yes<\/td>\n <\/tr> \n <\/tbody>\n <\/table>\n\n\n\n\n\n

Read on to learn how to distinguish secured vs. unsecured credit cards and how to choose the kind of credit card that\u2019s well suited to your current credit situation.<\/p>\n\n\n\n

How do secured credit cards work?<\/h2>\n\n\n\n

Secured credit cards work similarly to traditional (unsecured) credit cards, but they require a deposit to use. Before using a secured credit card, you\u2019ll need to provide a cash deposit that the lender keeps to back the credit they extend to you.\u00a0<\/p>\n\n\n\n

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Just like any other credit card, you can use a secured card<\/a> to pay for goods and services both in person and online. Your credit limit\u2014or the maximum amount you can charge to the card\u2014is usually equal to the cash deposit you provided. A typical deposit for a secured credit card may be anywhere from several hundred to several thousand dollars.\u00a0<\/p>\n\n\n\n

Because you can\u2019t spend more than you\u2019ve already paid to the lender, these kinds of cards are considered low risk, so they\u2019re often suggested to people without credit history or who need to rebuild their credit score<\/a>.\u00a0<\/p>\n\n\n\n

You\u2019ll want to be sure to pay your bill each month for a secured credit card. If you neglect to pay your bill for several months, the lender will use your deposit to pay off what you owe\u2014and they may close your account as well.<\/p>\n\n\n\n

Do secured credit cards help your credit?<\/h3>\n\n\n\n

Secured credit cards can help your credit<\/a>, but you\u2019ll need to keep a few things in mind:<\/p>\n\n\n\n