The difference between secured and unsecured credit cards
The key difference between secured and unsecured credit cards is this: Secured cards require an upfront deposit to open an account. Unsecured cards, or what you might think of as traditional credit cards, don’t require a deposit.
Learn more about secured and unsecured credit cards to help you choose which is best for you.
What you’ll learn:
-
Secured cards require a refundable deposit, while unsecured cards don’t.
-
Compared to secured credit cards, some unsecured credit cards may have lower interest rates and fees and higher credit limits.
-
Secured cards can be useful for people looking to establish or build their credit because the deposit might make them easier to qualify for.
-
You may become eligible to be upgraded from a secured card to an unsecured card.
Secured vs. unsecured credit cards
A secured credit card is a type of credit card that requires collateral to open an account. In this case, the collateral is a one-time deposit. Typically, this deposit is refundable. Unlike secured credit cards, unsecured credit cards don’t require a deposit or other collateral to open an account.
Deposits aside, secured and unsecured credit cards work the same way. You can use both types of cards to shop in person and online. And you’ll receive a statement at the end of the billing cycle.
There may be differences in interest rates, credit limits and rewards. According to the Federal Trade Commission, “Secured credit cards generally (but not always) have higher annual percentage rates and higher annual fees than unsecured cards.” But it depends on the card and the issuer. You can see below how Capital One secured and unsecured cards compare.
Building credit with a secured vs. an unsecured credit card
Building credit with a credit card generally works the same way, whether you’re using a secured or an unsecured card. Issuers typically report payment history, balances and other activity to the credit bureaus. Then credit-scoring companies use that information to calculate credit scores.
Using a secured card or an unsecured card responsibly over time may help you build credit. Responsible use includes paying on time every month and staying below your credit limit.
How to choose between secured and unsecured credit cards
The credit card that works best for someone else might not work for you. The same is true for deciding whether a secured credit card is better for you than an unsecured credit card. And keep in mind that if you have a secured card, you could get upgraded to an unsecured card eventually.
Capital One secured vs. unsecured cards
Capital One offers both secured and unsecured credit cards. Here’s a side-by-side look at how the Platinum Secured card and the Quicksilver Secured card compare to their traditional, or unsecured, counterparts:
| Quicksilver Secured card | Quicksilver card | Platinum Secured card | Platinum card | |
| Refundable deposit | $200 minimum | None | $49, $99 or $200 | None |
| Base rewards | 1.5% cash back | 1.5% cash back | No current rewards | No current rewards |
| Bonus | No current offer | $200 cash bonus once you spend $500 within three months of opening an account | No current offer | No current offer |
| Credit level | Fair | Excellent | Rebuilding | Fair |
Keep in mind that none of these cards charge an annual fee. View important rates and disclosures.
Secured vs. unsecured credit cards FAQ
Here are some frequently asked questions about the differences between secured and unsecured credit cards
Does a secured or unsecured credit card build credit faster?
One type of credit card doesn’t build credit faster than the other. Building credit takes time. When used responsibly, you can build credit and improve your credit scores with both secured and unsecured credit cards. Responsible use includes paying by your due date and staying below your credit limits.
Will a secured card raise my credit scores?
Using a secured credit card responsibly over time may help you improve your credit scores. But keep in mind that credit scores are complex, and many factors can affect them.
Can I get denied a secured credit card?
Although a secured card is often easier to get approved for than an unsecured card, it’s still possible to get denied. Each issuer has its own policies, and you might not meet the requirements for approval.
Key takeaways: Secured vs. unsecured credit cards
The main difference between secured and unsecured credit cards is the security deposit. Secured cards require a one-time deposit to open an account. Unsecured credit cards don’t.
If you’re considering a new card, you could start by comparing cards to find one that’s right for you. Checking for pre-approval offers can also help you get a better idea of which cards you may qualify for before you apply. Pre-approval is quick and won’t hurt your credit scores.
