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Key takeaways

  • Secured and unsecured cards essentially work the same. Both let you buy on credit and impact your score. The difference is one requires a refundable security deposit and the other does not.
  • Secured cards are a good way to establish your improve your score before moving on to unsecured cards with additional perks and higher limits.
  • Timely payments and a low utilization ratio positively impact your score and demonstrate financial reliability to lenders.

The difference between secured and unsecured credit cards is simple; one requires a cash deposit and the other does not. Why would anyone want to pay a deposit? Because it gives you access to credit that otherwise is impossible.

Many issuers will not approve applicants with scores below 670. If you have a poor or fair score you’ll have trouble qualifying for cards, especially for ones that don’t charge hefty fees. Your best bet is a secured card.

Let’s go over the benefits each type of card offers so you can choose if a secured or unsecured credit card is for you.

How secured credit cards work?

What is a secured credit card vs an unsecured one? Secured cards require a cash deposit that serves as collateral. This deposit reduces the risk to the issuer making secured ones easier to get. Typically the deposit sets the credit limit. So if you put down a $500 deposit you’ll have a $500 limit. Most issuers set minimum deposits at $200 and maximums at $3,000 but you can find exceptions.

Even though you put down a deposit, you do have to pay your bill each month. If you fail to pay your bill, the issuer will keep money from your deposit to offset what you owe and may charge a late fee. You will get your deposit back when you close your account in good standing meaning all your bills are paid.

Secured cards are a good way to improve your score and often have lower interest rates and fewer fees than unsecured cards for bad credit. Moreover, most secured cards offer the possibility of transitioning to an unsecured one after a period of consistent, timely payments, further incentivizing good financial behavior.

Examples of secured credit cards

Financial institutions know that consumers need help improving their scores so there are plenty of secured cards to choose from. Our favorites have low fees and low minimum security deposits.

Earn cash back with each purchase Get rewarded for banking you do every day No credit check or minimum security deposit
Regular APR
Recommended Score
Minimum Security Deposit
AutoPay so you’ll never miss a payment.

Current’s Build Card provides a unique path for people with low scores to raise them. It doesn’t require a security deposit or hard inquiry. But you must have a Current Spend Account to apply.

Current is a fintech app that introduced their Build Card to improve scores all while earning points for cash back. All you have to do is add money to your Current Spend account and you can use the card. It does not have a minimum (or maximum) security deposit requirement. Plus, you can use the money in your Spend account to pay your bills at the end of the month.

No annual fee or interest No credit check No minimum security deposit required
Regular APR
Recommended Score
Minimum Security Deposit
Use your security deposit to pay your monthly balance.

The Chime Secured Credit Builder Visa® is a rare find. There’s no hard inquiry, no minimum security deposit, and no annual fee or interest charges. If these perks appeal to you, it’s definitely worth a look.

The Chime Secured Credit Builder Visa® is a different kind of secured card. Rather than putting money in a security deposit, you link your card to your Chime Checking account and are able to use the money in there. This does mean that you have to be a Chime customer to be eligible. In return, Chime reports your monthly payments to the bureaus helping you improve your score.

No credit check New 4.50% APY on savings Get your pay up to 2 days early
Regular APR
Recommended Score
Minimum Security Deposit
Reports to Equifax, Experian, and TransUnion

Go2bank’s Secured Visa® has a low minimum security deposit, no annual fee, and no hard inquiry. You do have to be a Go2bank customer with a direct deposit of at least $100 in the past thirty days to qualify.

Go2bank’s Secured Card has a low security deposit requirement of $100, no hard inquiry, no annual fee, and no monthly maintenance fee. Go2bank makes it easy to pay your bill every month either via its app or online and then reports your payment history to all three bureaus aiding in improving your score.

What is an unsecured credit card?

Traditional credit cards are unsecured meaning they don’t require a security deposit. These cards are more common and often come with rewards and perks. Consumers normally have to have a score of 670 or higher to qualify. The limit varies but is typically determined by the issuer based on the cardholder’s creditworthiness and income.

Not all unsecured cards are out of reach for consumers with poor credit. Subprime cards have lenient requirements making them easy to qualify for but they also tend to have low limits, high interest rates, and additional fees. The additional fees help protect the issuer in case consumers default – fails to pay their bill.

Examples of unsecured credit cards

Our choices for unsecured cards include ones that offer cash back rewards and emphasize score repair.

Up to 3% cash back rewards No security deposit Prequalify instantly
Annual Fee
up to $49
Regular APR
Recommended Score
Monthly Fee
$5-$12.50 ($0 the first year)

Fortiva® Mastercard® is a good option for those with fair scores. It offers a high starting limit of $1,000, cash back rewards on all purchases, and the option to prequalify before you apply.

Fortiva® Mastercard® does is a rare rewards card for low scores that offers cash back up to 3% on eligible purchases. It comes with a high initial limit up to $1,000 and higher annual fees and interest rates, reflecting the elevated risk to the issuer. Prequalify with no impact on your score.

Earn cash back rewards on all purchases Instant transaction alerts Free monthly score
Annual Fee
up to $49
Regular APR
Recommended Score
Monthly Fee
$5-$12.50 ($0 the first year)

Aspire Mastercard® is a rewards card designed for people starting out. It’s easy to be approved for, gives you a high limit, and you can earn up to 3% cash back.

The Aspire Mastercard® is another cash back rewards card targeted at consumers with low scores. Earn 1% cash back on all purchases and up to 3% cash back on gas, groceries, and more. It does come with higher APRs and additional fees but offers an initial limit of up to $1,000.

Increase your limit Mobile account access at any time Account history is reported to the three major bureaus
Annual Fee
Regular APR
Recommended Score
Monthly Fee
$0-$12.50 ($0 the first year)

Indigo Mastercard® is a pretty choice for people with low scores. It’s easy to be approved for, reports your monthly payments, and offers a moderate limit.

Indigo Mastercard® is a basic card for anyone with a limited history, offering an opportunity to rebuild without a security deposit. It is easy to qualify for reports monthly to the three major bureaus, assisting you in establishing a positive payment history. Indigo does charge an annual fee as well as a monthly maintenance fee after the first year.

How To Apply for an Unsecured Credit Card

Applying for an unsecured card is straightforward. First do your research and compare cards so you find one with benefits you want and fees you can afford. Next, confirm that you qualify – check your score and prequalify – then apply.

You can typically apply online. The issuer will ask for your name, date of birth, Social Security number, address, email, phone, employment details, and income. Some may also inquire about monthly housing costs and other financial obligations.

After submitting your application, the issuer will perform a hard inquiry. This will cause your score to dip – it should bounce back in a few months to a year. If approved, the issuer will mail your card. Many give you your number right away so you can begin using it instantly.

Secured credit cards vs. unsecured credit cards

The following chart explains the biggest differences between secured vs unsecured credit cards.

Unsecured CardsSecured Cards
Average APR24.9% – 34.49%0% – 30.49%
Minimum Recommended Credit ScoreUsually 670 or higherNo credit history or scores below 669
Annual Fee$0 – $99Typically not
Deposit RequiredNoYes
Helps Build CreditYesYes
RewardsYes with many but not allSometimes

The choice between a secured vs unsecured credit card ultimately depends on one’s score and financial situation.

How can credit cards help your credit?

Credit cards help your score because when you use them you are essentially borrowing money. Swipe your card and the issuer pays the merchant directly for the purchase. No money comes out of your bank account.

At the end of the billing cycle, the issuer will send you a bill for your purchases. You only have to pay the minimum – typically 2% of the total balance or $25, whichever is more. When you pay your bill on time you demonstrate that you are reliable and can be trusted to repay what you owe.

Your score is a digital representation of your creditworthiness or how much you can be trusted to repay money you borrow. When you buy with credit – doesn’t matter if it’s a secured credit card or unsecured – and pay your bill on time, you show that you’re responsible and reliable.

Read more about debt.

Build or rebuild your credit

Experian Boost

The choice between a secured or unsecured credit card for rebuilding credit hinges on your current financial situation and how poor your score is. Secured cards are easier to qualify for but require a security deposit. Unsecured ones are harder to qualify for and many come with fees. Either way, both can help boost your score and follow the same rules:

  • Pay bills on time
  • Keep your utilization below 30%
  • Apply for new accounts sparingly
  • Maintain a mix of cards and loans
  • Don’t close old accounts

Establishing a long history of on time payments is the best thing for your score. Set up autopay so you never miss a bill and only make one or two purchases per month. This way you keep your bill affordable and never use more than 30% of your available credit line.

Boosting your score takes time – up to a year depending on where it was to begin with. Don’t be discouraged, just keep up the responsible behavior.

Here at MoneyFor, we can help you understand your score and learn how to raise it.

Frequently Asked Questions

Secured cards and prepaid cards are fundamentally different. Secured ones require a deposit that acts as collateral and determines your limit, yet they function like traditional cards by allowing you to borrow against your deposit and repay over time. In contrast, you load prepaid cards with your own money. This money is then deducted as you make purchases. There is no borrowing involved with prepaid cards and so they do not impact your score.

Yes, with a secured card your deposit is not gone forever; it simply serves as collateral. You should receive it back when you upgrade to an unsecured card or close your account, as long as you’ve paid off any outstanding balances.

The speed at which a secured card boosts your score varies by individual, but generally, you’ll see improvements within six to twelve months of responsible use. Demonstrate good habits, pay your bill on time, and keep your balance low and you’ll see your score improve.

Improving your score with a secured card is the same as doing so with a traditional one. Pay your bill on time each month. Paying in full is even better. Keep your utilization ratio below 30% – less is better. Lenders don’t want you to be reliant on them. Follow these two basic rules and your score will improve over time.

Bottom Line

The choice between a secured vs unsecured credit card depends on your score and financial situation. If your score is poor or fair – anything below 670 – then you are likely better off applying for a secured card – if you can afford the deposit. Not everyone can. That is why there are unsecured cards for low scores.

Either way, make sure you compare offers and find the best card with the lowest fees that fits your needs. Use it responsibly to improve your score and you’ll be able to qualify for a better card with rewards in the future.

About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.