Secured Vs. Unsecured Credit Card: What Is The Difference?

When you reach the legal age, you may be receiving calls with agents asking you whether you are interested in availing a credit card. Well, in today’s day and age, having a credit card has become an essential. With so many expenses mounting up on a daily basis as well as subtle increase in prices, some payments should be made in credit to ensure that you have enough cash should there be an emergency. So, if those agents give you a call, go for it – but make sure to provide them with the right details as false information could potentially cause harm to your credit rating.

There are two types of credit cards, namely: secured credit cards and unsecured credit cards. Do not be fooled by the names, however, as both credit cards are safe and issued by a legitimate bank. Below is an in-depth description of the following types:

Secured Credit Cards

If your card is secured, it means that it is backed by a cash deposit in the bank – your cash deposit. This is referred to as collateral.

With a secured card, you are essentially given a limit that does not exceed your bank balance. So, what happens then when you keep adding money to your account? Well, if you add more money to your account, you can get an increase in credit limit over time. In addition to that, your limit can also increase if you show good payment history with your credit card bills.

It is important to note that not all banks issue secured credit cards, so it is important to check with your bank first if they do.

Unsecured Credit Cards

This type is known to be the most common type of credit cards. With an unsecured credit card, the lender lends you money based on your credit rating, which includes your credit score, credit reports, payment records, and other such records that show your capacity to pay back when needed.

Having said this, it is, of course, more difficult to get an unsecured card, but it is definitely the better choice given that you have no past credit history that may alert your lender or the bank. You have to remember that the lenders consider issuing this debt as risky as they are unsure of what your payment behavior is like.

So far, so good. Definitely, the better choice when it comes to getting a credit card. What is the catch, though? Well, since it is a riskier debt, they need reassurance that they are going to be paid on time. They do this by placing a high-interest rate when you use the card – credit cards tend to have interest rates are higher than other forms of debt such as car and home loans.

With this generation, lenders are convinced that payments will be made on time. For this reason, a number of banks do not offer a secured credit card option. In fact, they will most likely offer an unsecured credit card with a lower limit and a higher interest rate so that you will think twice before spending your lender’s money – the spending will be kept to a minimum. For those who have been through a catastrophic life event and slowly rebuilding, a secured credit card is still a good choice as it is sometimes the only option available to them.

So, with all that has been mentioned on both credit card types, what credit card type should you apply for?

Of course, if you have no issue with your credit rating, then it may be best to get an unsecured credit card as it does not require you to use your money off of your bank account. Your bank account should exist for savings that may be used over time or worst, in emergencies.

for more info about secured and unsecured credit cards, visit

If you are not totally familiar with how secured and unsecured credit cards work, visit for more info. Our team has compiled a ton of useful information so you’ll be guided accordingly.

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