| Secured credit card | Unsecured credit card | |
|---|---|---|
| Requires a security deposit | ||
| Reports activity to the credit bureaus | ||
| Credit limit is usually based on your deposit | ||
| Credit limit is based on your creditworthiness | ||
| Can earn rewards | ||
| Some don't require a credit check | ||
| Cards for limited/poor credit often come with high fees |
A secured credit card is a type of credit card that requires you to submit a security deposit — usually starting at $200 — in order to open the account. The security deposit serves as collateral and typically determines your credit limit. For example, if you put down a $200 deposit, your credit limit will be $200.
An unsecured credit card, often called a “traditional” credit card, doesn’t require a deposit for approval. Most credit cards are unsecured and typically offer better rewards, perks lower fees and lower interest rates than secured credit cards — provided you meet the credit requirements. If you have poor or limited credit, you’ll find it difficult to qualify for most unsecured cards.
As long as you have a secured card that reports your credit history to the three major bureaus — Equifax, Experian, TransUnion — it can help you build credit in exactly the same way as an unsecured credit card. Both types of cards allow you to make charges and pay them off at a later date. Your payment history is then reported to the credit bureaus and used to build your credit score. You’ll typically have a grace period with secured and unsecured cards, which means you won’t pay interest if you pay your balance in full by the due date.
The key to building credit with either option is using your card responsibly by making on-time payments and limiting your credit utilization. On-time payments are the most important factor in building credit with a credit card, making up 35% of your FICO score. Credit utilization, which makes up another 30% of your FICO score, is the percentage of available credit you use. To maintain a good credit score, you should try to limit your credit utilization to 30% or less.
If you choose a secured credit card to help build your credit, you’ll likely want to upgrade to an unsecured card with better perks and rewards once your credit improves and get your security deposit back. It’s not a difficult process to upgrade your card, but it requires some patience. Here are three ways you can upgrade from a secured credit card to an unsecured credit card:
A variety of banks offer secured credit cards, from large institutions to smaller banks and credit unions. That said, American Express, Chase and Wells Fargo don’t issue secured cards since they prefer to target applicants with good to excellent credit.
| Issuer | Do they offer secured credit cards? | Examples |
|---|---|---|
| American Express | N/A | |
| Bank of America |
|
|
| Capital One | ||
| Chase | N/A | |
| Citi | ||
| Discover | ||
| Navy Federal Credit Union |
|
|
| U.S. Bank |
|
|
| Wells Fargo | N/A |
| Credit Cards | Our Ratings | Minimum deposit | Rewards Rate | Recommended Credit Credit scores ranges may vary. Your individual chance at approval may vary due to factors such as creditors using a particular variation at their discretion | |
|---|---|---|---|---|---|
Discover it® Secured Credit Card*
|
Overall best secured
|
$200 | 1% - 2% cash back
| Limited / Poor | |
Capital One Platinum Secured Credit Card*
|
Secured card with a low deposit
|
$49 | N/A | Limited / Poor | |
Capital One Quicksilver Secured Cash Rewards Credit Card*
|
Secured card with rewards
|
$200 | 1.5% - 5% Cash Back
| Limited / Poor | |
Chase Freedom Rise® Credit Card*
|
Unsecured for building credit
|
$0 | 1.5% cash back
| Good / Excellent | |
Capital One Savor Cash Rewards Credit Card*
|
Unsecured cash back card
|
$0 | 1% - 8% cash back
| Good / Excellent | |
Wells Fargo Reflect® Card*
|
Unsecured balance transfer card
|
$0 | N/A | Good / Excellent | |
Capital One Venture X Rewards Credit Card*
|
Unsecured travel card
|
$0 | 2X - 10X miles
| Excellent |
The best card option depends on your credit history. Secured credit cards are better if you have poor or limited credit. They provide an affordable way to build credit and are easier to qualify for due to the security deposit. Many have no annual fee, and some even offer rewards. Secured cards also tend to be more transparent about their terms compared to unsecured credit cards for bad credit.
If you have good to excellent credit, an unsecured rewards credit card is the best choice. These cards often come with higher credit limits, access to travel benefits and other valuable perks. These cards also allow you to earn points or miles redeemable for travel, cash back or other popular redemptions.
If you have good or excellent credit, unsecured credit cards are better because they come with better perks, rewards and lower fees and interest rates. If you have poor credit or no credit, secured credit cards are better. They’ll generally offer more favorable terms that give you an opportunity to build credit and eventually qualify for a good unsecured credit card.
A secured credit card requires a refundable security deposit upfront that serves as your line of credit. You can use a secured credit card anywhere traditional credit cards are accepted.
You can get your security deposit back when you upgrade to an unsecured credit card or close your secured credit card account — as long as your account is in good standing and your balance is paid in full.
No, secured credit cards require you to submit a security deposit before you open your account, which determines your credit limit. Unsecured credit cards don’t require a security deposit.
You can get a secured credit card by applying online or in person at a bank and submitting the required security deposit. To be eligible, you typically need to be at least 18 years old and have a Social Security number, U.S. address and U.S. bank account.
If the secured credit card reports your account activity to the three major credit bureaus, you can build your credit over time with responsible usage. This means paying your balance on time and in full (if possible) every month, as well as staying well below your credit limit.
Chase is one of the few major issuers that doesn’t offer a secured credit card. If you’re looking to build credit with a Chase card, the issuer does offer the Chase Freedom Rise® Credit Card.
For Capital One products listed on this page, some of the benefits may be provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply
The information related to the Bank of America® Customized Cash Rewards Secured Credit Card, Bank of America® Unlimited Cash Rewards Secured Credit Card, BankAmericard® Secured Credit Card, Citi® Secured Mastercard®, Navy Federal nRewards® Secured Credit Card, U.S. Bank Altitude Go Visa Secured Card, U.S. Bank Cash+ Visa Secured Card, U.S. Bank Secured Visa Card, Chase Freedom Rise® Credit Card, Wells Fargo Reflect® Card and Wells Fargo Active Cash® Card has been independently collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply.
The content above is not provided by any issuer. Any opinions expressed are those of LendingTree alone and have not been reviewed, approved, or otherwise endorsed by any issuer. The offers and/or promotions mentioned above may have changed, expired, or are no longer available. Check the issuer's website for more details.
