When you're shopping for your first credit card—or trying to rebuild credit—you'll quickly run into two terms: secured and unsecured credit cards.
What's the difference? Which one should you get? And does it matter for building credit?
Let me break it all down in plain English so you can make the right choice for your situation.
What is a Secured Credit Card?
Think of a secured credit card as a credit card with training wheels.
How It Works:
- You make a deposit: You give the bank $200-$2,500 as collateral
- That becomes your credit limit: If you deposit $300, your credit limit is usually $300
- You use it like a regular card: Make purchases, pay monthly bills
- The bank keeps your deposit as security: If you don't pay, they can use your deposit to cover it
- You get your deposit back: After 6-12 months of good behavior, most banks refund your deposit and upgrade you to an unsecured card
Real-Life Example:
Maria has no credit history. She applies for a secured card and deposits $500. Now she has a $500 credit limit. She uses it to buy gas and groceries, paying the balance in full each month. After 12 months, the bank refunds her $500 and increases her credit limit to $1,500—no deposit needed!
What is an Unsecured Credit Card?
An unsecured credit card is what most people think of as a "regular" credit card.
How It Works:
- No deposit required: The bank gives you a credit limit based on your creditworthiness
- You borrow on trust: The bank is trusting you to pay them back
- Higher limits are possible: If you have good credit, you might get a $5,000+ limit
- More perks: Many unsecured cards offer rewards, cash back, travel benefits, etc.
Real-Life Example:
After building credit with her secured card, Maria now qualifies for an unsecured card. She applies for a cash back card and gets approved with a $3,000 limit—no deposit needed. She earns 2% back on all purchases and pays no annual fee.
Side-by-Side Comparison
| Feature | Secured Card | Unsecured Card |
|---|---|---|
| Deposit Required? | Yes ($200-$2,500) | No |
| Who Can Qualify? | Anyone, even with no/bad credit | Need fair-to-good credit (usually 580+) |
| Credit Limit | Equals your deposit | Based on creditworthiness |
| Builds Credit? | Yes! Same as unsecured | Yes |
| Annual Fees | Usually $0, some charge $25-35 | Varies ($0 to $500+ for premium cards) |
| Rewards | Rare (Discover it® Secured is an exception) | Common (cash back, points, miles) |
| Approval Odds | Very high | Depends on your credit |
| Can Upgrade? | Yes, after 6-12 months of good use | N/A (already unsecured) |
Key Differences Explained
1. Approval Requirements
Secured Cards:
- ✅ Designed for people with no credit or bad credit
- ✅ Almost guaranteed approval if you can make the deposit
- ✅ No minimum credit score needed
Unsecured Cards:
- ⚠️ Require some credit history
- ⚠️ Usually need a credit score of 580+ (fair credit)
- ⚠️ Better cards require 670+ (good credit)
Bottom Line: If you have no credit history or a low credit score, start with a secured card. If you already have fair-to-good credit, go for an unsecured card.
2. Credit Limits
Secured Cards:
- Your limit = your deposit amount
- Want a higher limit? Deposit more money
- Most cards allow deposits up to $2,500-$5,000
Unsecured Cards:
- The bank decides your limit based on your credit and income
- Can be $500 to $25,000+ depending on your creditworthiness
- Higher limits are possible without depositing cash
Bottom Line: Secured cards have lower limits, but that's okay when you're starting out. You don't need a high limit to build credit.
3. Getting Your Money Back
Secured Cards:
- Your deposit is refundable
- Most banks return it after 6-12 months of on-time payments
- Some automatically upgrade you to unsecured (and refund your deposit)
- If you close the account in good standing, you get your deposit back
Unsecured Cards:
- No deposit, so nothing to get back
- But also no upfront cash needed
Bottom Line: Think of the secured card deposit as a temporary loan to yourself. You'll get it back!
4. Rewards and Perks
Secured Cards:
- Most don't offer rewards
- Exception: Discover it® Secured offers 2% cash back at gas stations and restaurants, 1% everywhere else
Unsecured Cards:
- Often come with rewards (cash back, points, miles)
- May include perks like travel insurance, purchase protection, extended warranties
- Premium cards ($95+ annual fee) offer even more benefits
Bottom Line: If rewards are important to you, build credit with a secured card first, then upgrade to a rewards card after 6-12 months.
5. Impact on Credit Score
Here's the good news: Both types build credit equally!
Whether you have a secured or unsecured card, the credit bureaus see them the same way. What matters is:
- ✅ Paying on time
- ✅ Keeping your balance low (under 30% utilization)
- ✅ Age of the account
- ✅ Not maxing it out
Your credit report doesn't say "secured" or "unsecured"—it just shows you have a credit card in good standing.
Example:
Both Maria (secured card) and John (unsecured card) started with no credit. After 12 months of paying on time and keeping balances low, both have credit scores around 710. The type of card didn't matter—their responsible use did!
Which Should You Choose?
Choose a SECURED card if:
✅ You have no credit history
✅ Your credit score is below 580 (or you don't have a score yet)
✅ You've been rejected for unsecured cards
✅ You're rebuilding credit after bankruptcy or serious delinquencies
✅ You can afford the deposit (usually $200-500)
Best for: Absolute beginners, people rebuilding credit
Choose an UNSECURED card if:
✅ You have a credit score of 670+ (good credit)
✅ You want rewards (cash back, travel points, etc.)
✅ You don't want to tie up cash in a deposit
✅ You've already built some credit (maybe as an authorized user or with a previous card)
Best for: People with established credit, those upgrading from secured cards
Not Sure? Start with Secured
Here's my advice: If you're on the fence, start with a secured card. Here's why:
- Guaranteed approval = no wasted hard inquiries
- Low risk = you can't spend more than your deposit
- Fast track to unsecured = most issuers upgrade you in 6-12 months
- Same credit-building power = builds your score just as well
You're not "stuck" with a secured card forever. It's a stepping stone to better cards.
Best Secured Credit Cards (2026)
If you're going the secured route, here are the top picks:
1. Discover it® Secured ⭐ Editor's Choice
Deposit: $200 minimum
Annual fee: $0
Rewards: 2% cash back at gas stations and restaurants, 1% everywhere else
Why it's great: Only secured card with meaningful rewards
2. Capital One Platinum Secured
Deposit: $49, $99, or $200 (for a $200 limit)
Annual fee: $0
Why it's great: Lower initial deposit options
3. Citi® Secured Mastercard®
Deposit: $200-$2,500
Annual fee: $0
Why it's great: Flexible deposit amounts, trusted issuer
Best Unsecured Cards for Fair Credit (2026)
If you have some credit already (580-669 score), try these:
1. Capital One QuicksilverOne
Credit needed: Fair (580+)
Annual fee: $39
Rewards: 1.5% cash back on all purchases
2. Petal® 2 Visa® Credit Card
Credit needed: Fair credit, or no credit with income verification
Annual fee: $0
Rewards: 1% cash back (up to 1.5% with on-time payments)
3. Upgrade Cash Rewards Visa®
Credit needed: Fair (580+)
Annual fee: $0
Rewards: Unlimited 1.5% cash back
How to Upgrade from Secured to Unsecured
Most people don't stay with secured cards forever. Here's your upgrade path:
Automatic Upgrade (Best Option)
Many issuers will automatically review your account after 6-12 months. If you've:
- Paid on time every month
- Kept your balance low
- Demonstrated responsible use
They'll upgrade you to an unsecured card and refund your deposit. No application needed!
Cards that do this:
- Discover it® Secured (reviews at 8 months)
- Capital One Platinum Secured (reviews at 6+ months)
- Bank of America® Unlimited Cash Rewards Secured (reviews periodically)
Request an Upgrade
If your card doesn't automatically upgrade:
- Call the number on the back of your card
- Ask for a credit line increase review or upgrade to unsecured
- They'll review your account and may approve you on the spot
Best time to ask: After 12+ months of perfect payment history
Apply for a New Unsecured Card
Once you've built credit with your secured card (usually after 6-12 months and a credit score of 670+), you can:
- Apply for a separate unsecured card
- Keep your secured card open (don't close it!)
- Use the new unsecured card as your primary card
Why keep the secured card open? It helps your credit by:
- Increasing your available credit (lowers utilization)
- Lengthening your credit history (age of accounts)
Common Myths About Secured Cards
Myth 1: "Secured cards don't build real credit"
Truth: They build credit exactly the same as unsecured cards. The credit bureaus treat them identically.
Myth 2: "You'll never get your deposit back"
Truth: You get your deposit back when you close the account in good standing OR when you're upgraded to unsecured.
Myth 3: "Secured cards are for people with bad credit"
Truth: They're for people with no credit OR bad credit. Many people with no credit history use secured cards as a smart starting point.
Myth 4: "You need to carry a balance to build credit"
Truth: Nope! Pay your balance in FULL every month. You'll build credit without paying a cent in interest.
Frequently Asked Questions
Can I have both a secured and unsecured card?
Yes! In fact, this can be a smart strategy. Use your secured card to build credit, then add an unsecured card once you qualify. Having multiple cards in good standing can actually help your score (by lowering overall utilization).
How long should I keep a secured card?
Until you upgrade or until you have 2-3 other credit cards in good standing. Don't close it too soon, as it can hurt your credit score (especially if it's your oldest account).
Will people know I have a secured card?
No. The physical card looks the same, and cashiers/merchants can't tell the difference. Your credit report also doesn't label it as "secured."
Can I upgrade my secured card to a different unsecured card?
Usually, issuers will upgrade you to the unsecured version of the same card. If you want a different card (like a rewards card), you'll need to apply separately once you qualify.
Your Action Plan
If you need a secured card:
- Choose a card (I recommend Discover it® Secured)
- Save up your deposit ($200-500)
- Apply online
- Make small purchases and pay in full every month
- Request an upgrade after 12 months
If you qualify for an unsecured card:
- Check your credit score (use Credit Karma, free)
- Compare cards based on your score range
- Apply for ONE card
- Use it responsibly (pay on time, keep utilization low)
Keep Learning
Ready to dive deeper into building credit?
- The Complete Guide to Building Credit in America ← Full strategy guide
- How to Get Your First Credit Card with No Credit History
- Understanding Credit Utilization: The 30% Rule
Still have questions about secured vs. unsecured cards? Drop a comment below!
Last Updated: January 2026
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