If you’re building credit for the first time—or trying to repair past mistakes—you’ll likely come across two types of credit cards: secured and unsecured. They may look the same in your wallet, but they work very differently behind the scenes.
Choosing the right card depends on your credit history and goals. Secured cards can help you establish or rebuild credit, while unsecured cards offer more rewards and flexibility for those with stronger credit. This guide explains how each type works and how to pick the one that fits your situation.
Key Takeaways
- Secured credit cards require a refundable security deposit and are easier to get with poor or limited credit; unsecured cards require no deposit and approval is based on creditworthiness.
- Secured cards can help build or rebuild credit, but typically offer fewer rewards and carry higher interest rates.
- Unsecured cards offer better rewards and lower interest rates, but are harder to qualify for and usually come with higher credit limits.
What is a secured credit card?
A secured credit card is designed to help people build or rebuild credit. It works like a traditional credit card, but you must provide a refundable cash deposit upfront. This deposit protects the credit card issuer if you stop making payments.
Your credit limit typically matches your deposit. For example, if you put down $300, your limit will likely be $300. Over time, some credit card issuers may increase your limit or refund your deposit once you show a strong payment history.
Who should consider a secured credit card?
Secured credit cards are a good fit if you:
Since secured cards have more flexible approval requirements, they can be a smart starting point for anyone looking to improve their credit.
How the Security Deposit Works
The security deposit is a refundable payment held by the credit card issuer. It is not used to cover monthly payments. You must still make at least the minimum payment on time each month to avoid late fees and damage to your credit history.
If you close your account in good standing or upgrade to an unsecured card, your deposit is returned.
How a Secured Credit Card Can Help Build Credit
A secured credit card reports your activity to the three major credit bureaus: Equifax, Experian, and TransUnion. By making on-time payments and keeping your balance low, you can build a positive credit history. Over time, this can improve your credit score and help you qualify for better credit options.
See also: How to Get Your First Credit Card
Chime Credit Builder Secured Visa® Credit Card
The Chime Credit Builder Secured Visa® Credit Card is a great option for those looking to establish or rebuild their credit. Key features include:
- No credit check to apply
- No annual fees or interest charges
- No minimum security deposit
- Reports to all three major credit bureaus
- Easy-to-use mobile app
What is an unsecured credit card?
An unsecured credit card does not require a security deposit. The credit card issuer approves you based on your creditworthiness. If approved, you receive a set credit limit without having to provide collateral.
Most credit cards on the market today are unsecured cards.
Who should consider an unsecured credit card?
Unsecured credit cards are best for:
- People with good to excellent credit
- Those with an established credit history
- Anyone looking to earn rewards and take advantage of credit card perks
Unsecured cards usually offer more benefits, but approval is harder to obtain if you have poor credit.
Typical Rewards and Benefits
Unsecured credit cards often feature rewards programs. These can include:
- Cash back on purchases
- Travel rewards, such as points or miles
- Introductory 0% interest offers
- Fraud protection and travel insurance
The best unsecured credit cards combine low fees with rewards that match your spending habits.
Risks of Carrying a Balance
Carrying a balance on any credit card can lead to high interest charges. Unsecured cards often have lower rates than secured cards, but interest can still add up quickly if you do not pay in full each month.
If you regularly carry a balance, your credit utilization ratio may rise, which can lower your credit score. Paying on time and keeping your balance low is the best way to protect your credit and avoid costly interest.
Secured vs. Unsecured Credit Cards: Side-by-Side Comparison
Here is a quick comparison to help you see how secured and unsecured credit cards stack up:
| Feature | Secured Credit Card | Unsecured Credit Card |
|---|---|---|
| Requires deposit | Yes | No |
| Who it’s best for | Poor, limited, or no credit | Good to excellent credit |
| Builds credit | Yes | Yes |
| Rewards programs | Rare | Common |
| Interest rates | Higher | Lower |
| Approval requirements | Easier | Stricter |
How to Choose the Right Card for You
Choosing between a secured or unsecured credit card depends on your credit history and financial goals. Here’s how to decide what works best for your situation.
If You’re Building Credit From Scratch
If you have no credit history, a secured credit card is usually the best place to start. These cards are easier to get approved for and give you a simple way to establish positive credit history. Look for a secured card with low fees and a clear path to upgrade once your credit improves.
If You’re Rebuilding Damaged Credit
If your credit history includes missed payments, collections, or other negative marks, a secured credit card can help you get back on track. Because approval requirements are more flexible, you can start rebuilding your credit with on-time payments and responsible use. Over time, this can help you qualify for better credit options.
See also: Do-It-Yourself Credit Repair: The Essential Guide for 2025
If You Have Good Credit and Want Rewards
If your credit is in good shape, an unsecured credit card will offer more value. Look for a card with a strong rewards program, low interest rates, and minimal fees. Whether you prefer cash back, travel rewards, or other perks, the best unsecured cards provide benefits that match your spending style.
What to Look for in a Secured Credit Card
Not all secured credit cards offer the same value. Here are the key features to focus on:
- No or low fees: Look for a secured card with no annual fee or a very low one. This helps ensure more of your deposit goes toward building credit, not paying fees.
- Reports to all three credit bureaus: The card should report your payment activity to Equifax, Experian, and TransUnion. This is how you build or rebuild your credit score.
- Path to upgrade to unsecured card: Some credit card issuers offer the option to graduate to an unsecured card. This allows you to get your deposit back and continue building credit without needing to apply for a new card.
- Deposit flexibility: Look for cards that let you choose your deposit amount or increase your credit limit over time. This gives you more control over your spending limit.
What to Look for in an Unsecured Credit Card
If you qualify for an unsecured credit card, here’s what to prioritize:
- Low interest rates: A lower interest rate can save you money if you ever need to carry a balance.
- Rewards that match your lifestyle: Choose a card with rewards that fit your spending. Whether you want cash back, travel points, or other perks, pick a program you will actually use.
- No or low annual fee: Many excellent unsecured credit cards have no annual fee. If a card charges a fee, make sure the rewards or benefits outweigh the cost.
- Strong fraud protection features: Good fraud protection gives you peace of mind. Look for cards that offer real-time alerts, zero liability for unauthorized purchases, and quick resolution of disputed charges.
Best Secured Credit Cards of 2025
If you are looking for a secured credit card, here are some of the best options to consider in 2025:
Current Build Credit Card
The Current Build Credit Card offers a simple and flexible way to build credit without requiring a credit check or minimum security deposit. You fund your account with the money you already have, and your spending activity is reported to all three major credit bureaus.
You can also earn points on purchases at over 14,000 participating merchants, which can be redeemed for cash back. If you set up direct deposit, you may get paid up to two days early and qualify for fee-free overdraft protection. There are no interest charges or annual fees, making this a strong option for anyone starting to build or rebuild credit.
Chime Credit Builder Secured Visa® Credit Card
The Chime Credit Builder Secured Visa® Credit Card is one of the most flexible secured credit cards on the market. There is no minimum security deposit required, and there are no annual fees or interest charges.
To qualify, you need a Chime Checking Account with at least $200 in qualifying direct deposits. Once approved, you fund your secured card with the amount of your choice, which becomes your spending limit. Your activity is reported to all three major credit bureaus. The Chime app also provides helpful tools to track your spending and payment activity.
This card is ideal for those looking to build credit without locking away a large deposit or paying unnecessary fees.
Discover it® Secured Credit Card
The Discover it® Secured Credit Card offers one of the few secured card options with a full rewards program. You can earn 2% cash back on your first $1,000 in combined gas station and restaurant purchases each quarter, plus 1% back on all other purchases.
There is no annual fee and no hidden fees. Your responsible use is reported to all three major credit bureaus. The card also offers automatic account reviews starting at seven months to see if you qualify to upgrade to an unsecured card and get your deposit refunded.
One thing to note is the interest rate: the Discover it® Secured Card carries a 24.99% variable APR, so paying your balance in full each month is the smartest strategy.
Capital One® Platinum Secured Credit Card
The Capital One® Platinum Secured Credit Card is another solid option with no annual fee. It offers flexible deposit requirements—some applicants may qualify for a $200 credit limit with a deposit as low as $49, depending on creditworthiness.
Capital One automatically reviews your account for potential credit limit increases after five months of on-time payments, giving you the opportunity to expand your credit without providing additional deposit funds. Your payment activity is reported to all three major credit bureaus, helping you build a positive credit history.
While this card does not offer rewards, it is a reliable choice for anyone focused on credit building with low upfront costs.
Tips for Building Credit With Any Card
No matter which type of credit card you choose, these habits can help you build a strong credit history:
- Pay in full and on time: Always pay at least the minimum amount by the due date. Ideally, pay your full balance each month to avoid interest charges and late fees.
- Keep your credit utilization low: Try to keep your balance well below your credit limit. A credit utilization ratio under 30% is ideal for improving your credit score.
- Monitor your credit reports: Regularly check your credit reports from Equifax, Experian, and TransUnion to ensure that your information is accurate. Dispute any errors that could harm your credit.
Bottom Line
Secured credit cards are a great way to build or repair credit, especially if you have poor or limited credit history. Once your credit improves, an unsecured credit card can offer better rewards, lower costs, and more flexibility.
The best choice depends on where you are in your credit journey. Focus on using your card responsibly—pay on time, keep your balances low, and monitor your credit reports—to build a stronger credit profile over time.
Frequently Asked Questions
Can you be denied for a secured credit card?
Yes. Secured credit cards are easier to get than unsecured cards, but approval is not guaranteed. You can be denied if you have a recent bankruptcy, unpaid collections, or income that does not meet the credit card issuer’s requirements. Some issuers also check your credit history.
If denied, look for secured cards that do not require a credit check or contact the issuer to find out why your application was declined.
What happens to my deposit if I close my secured credit card?
If you close your secured credit card in good standing, your deposit is refunded. You must pay off the full balance first. Once the account is fully paid and closed, the credit card issuer will return your deposit, usually within a few weeks.
If you owe money when the account closes, your deposit may be used to cover the remaining balance.
How long should I keep a secured credit card?
Plan to keep your secured credit card for at least six to twelve months. This gives you time to build a positive credit history. Many issuers will review your account after several months to see if you qualify to upgrade to an unsecured card.
Keeping the account open longer can also help your credit score by increasing your length of credit history. Always pay on time and keep your balance low while the card is open.
How do I change my secured credit card to unsecured?
Once your credit improves, you have two options: apply for a new unsecured credit card or see if your secured credit card can be upgraded. Some credit card issuers will automatically review your account and offer to convert it to an unsecured card.
If your issuer does not offer upgrades, you can apply for a new unsecured card. After you are approved, pay off your secured card balance, close the account, and your deposit will be refunded.
Do secured and unsecured credit cards have the same rewards?
No. Unsecured credit cards typically offer stronger rewards, including cash back, points, or travel perks. Most secured credit cards do not offer rewards, though a few provide limited cash back on certain purchases.
If earning rewards is a priority, aim to qualify for an unsecured credit card once your credit improves.
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