The difference between secured and unsecured credit cards
The key difference between secured and unsecured credit cards is that secured cards require a refundable deposit to open an account. Unsecured cards, or what you might think of as traditional credit cards, don’t.
That deposit typically makes secured cards easier to qualify for than unsecured cards. And that makes them ideal for people trying to establish or build credit.
What you’ll learn:
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A secured credit card is a type of credit card that requires collateral in the form of a one-time deposit to open an account.
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Compared to secured credit cards, unsecured credit cards may have lower interest rates and higher credit limits.
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Capital One offers both secured and unsecured credit cards.
Secured vs. unsecured credit cards
Deposits aside, secured credit cards 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.
Capital One secured vs. unsecured cards
Capital One offers both secured and unsecured credit cards. Here’s a side-by-side look at similar cards, none of which have annual fees. View important rates and disclosures.
| Platinum Secured card | Platinum card | |
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Refundable deposit |
As low as $49 for a credit limit of at least $200 | None |
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Base rewards |
No current rewards | No current rewards |
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Bonus |
No current offer | No current offer |
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Credit level |
Rebuilding | Fair |
Capital One also offers secured rewards cards.
| Quicksilver Secured card | Quicksilver card | |
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Refundable deposit |
$200 minimum for a credit limit of at least $200 | None |
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Basic rewards |
1.5% cash back | 1.5% cash back |
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Bonus |
No current offer | $200 cash bonus once you spend $500 within three months of opening an account |
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Credit level |
Fair | Excellent |
Building credit with a secured vs. an unsecured credit card
Building credit with a credit card 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. Credit-scoring companies then 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
Deciding between a secured or unsecured credit card depends on your credit history, financial habits and what you’re looking to get out of the credit card.
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You might choose a secured credit card if you want to establish or build your credit scores. You may also consider this type of credit card if you don’t qualify for an unsecured credit card.
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An unsecured credit card might be a better choice if you’re looking for higher credit limits and want to access more card benefits. If you manage a secured card responsibly, your issuer might upgrade it to an unsecured card.
Secured vs. unsecured credit cards FAQ
Here are some frequently asked questions about the differences between secured and unsecured credit cards:
Will a secured card raise my credit scores?
Using a secured credit card responsibly over time may help you improve your credit scores. But 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.
How can I upgrade from a secured card to an unsecured credit card?
Issuers like Capital One consider secured card upgrades for cardholders who establish a positive track record by doing things like:
- Making on-time payments: Payment history is also an influential factor in calculating your credit scores. You can set up automatic payments to avoid paying bills late.
- Keeping balances low: A low credit utilization ratio is another important credit-scoring factor. The Consumer Financial Protection Bureau says to aim to keep it below 30%.
- Avoiding frequent applications for new credit: Applying for new credit can cause a hard inquiry, which can cause a dip in your credit scores.
Key takeaways: Secured vs. unsecured credit cards
The main difference between secured and unsecured credit cards is collateral. Secured cards require a refundable deposit to open an account. Unsecured credit cards don’t.
If you’re considering a new card, you can see if you have guaranteed card offers before accepting. The process is quick and won’t hurt your credit scores.
