Advertiser Disclosure Editorial Disclosure

Secured vs. Unsecured Credit Cards: Which Is Right for You?

Having bad credit is challenging. A bad credit score can keep you from getting a mortgage, auto loan, or other financing options. Fortunately, there are ways to repair credit, with credit cards being a great first option. These choices include both secured and unsecured cards. But which is best for you? Between secured and unsecured credit cards: Here’s what you need to know.

Secured vs. Unsecured Credit Cards: What’s the Difference?

While unsecured and secured cards for bad credit are among the easiest credit cards to apply – and get approved – for, what exactly are they?

What is a Secured Credit Card?

Secured credit cards are one of the best options for people with bad credit. Secured cards require an initial cash deposit, which acts as security for the ability to pay with credit – hence the name “secured credit card”.

The deposit requirement also acts as the line of credit. If you deposit $200, you can expect a credit line of $200 in most cases. The more you deposit, the larger your credit limit.

Because these card types require a deposit, they often come without the need for a credit check. This means that when you apply for a secured credit card, there is no hard inquiry on your credit report. This, in turn, implies there is no negative impact on your credit score.

Beyond the initial deposit, secured cards act in the same way as any other credit card, meaning you can use them wherever their payment network (Visa, Mastercard, or Discover) is accepted.

What is an Unsecured Credit Card?

Unsecured cards differ from secured cards in that they do not require a depot. Unsecured credit cards are what comes to mind for most people when they hear the words “credit card.”

With unsecured cards, you apply and – if approved – get a line of credit you can use for purchases. Because the line of credit requires no security deposit, these types of credit cards do involve a credit check and a hard inquiry on your credit report. And, because they don’t need collateral, they may be harder to receive than a secured card.

Why Choose a Secured Card Over an Unsecured Card?

Secured cards are among the best credit cards for rebuilding bad credit. Secured offers are easy to get and offer a straightforward route to boosting your credit score.

Secured cards can sometimes feature a lower interest rate than unsecured cards for bad credit. These interest rates are also usually fixed, meaning they won’t fluctuate based on your creditworthiness.

Some cards, like the First Progress Platinum Prestige Mastercard® and the First Progress Platinum Select Mastercard®, have an APR that is comparable to those of the very best credit cards for people with excellent credit scores.

The Prestige, for instance, has an APR of just 9.99%, which is among the lowest among credit cards. While the card does charge a higher annual fee than some other secured cards, it is still lower than the fees that come with several unsecured cards. Those cards also feature higher interest rates.

First Progress Platinum Prestige Mastercard® Secured Credit Card

No Credit History or Minimum Credit Score Required

First Progress Platinum Prestige Mastercard® Secured Credit Card
  • Regular Purchase APR 9.99% variable based on the Prime Rate
  • Cash Advance APR 18.99% variable based on the Prime Rate
  • Annual Fee $49
  • Credit Needed Poor , No Credit Required
  • Processing Network Mastercard
Best Benefits
  • No Credit History or Minimum Credit Score Required for Approval
  • Quick and Complete Online Application
  • Full-Feature Platinum Mastercard® Secured Credit Card
  • Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
  • 24/7 Online Access to Your Account
Rates & Fees
  • Regular Purchase APR: 9.99% variable based on the Prime Rate
  • Cash Advance APR: 18.99% variable based on the Prime Rate
  • Cash Advance Transaction Fee: Either $10 or 3% of the amount of each cash advance, whichever is greater
  • Annual Fee: $49
  • Foreign Transaction Fee: 3% of the transaction amount
  • Late Payment Penalty Fee: Up to $40
  • Return Payment Penalty Fee: Up to $29
  • Minimum Deposit Required: $200

Add cards to start comparing.

  

The Platinum Select Secured Card has a slightly higher interest rate (13.99%) but a lower annual fee than the First Progress Prestige. The purchase APR with the Select is still well below the average APR for those with excellent credit, making it a great choice for those who want a low APR but not a high annual fee.

First Progress Platinum Select Mastercard® Secured Credit Card

No Credit History or Minimum Credit Score Required

First Progress Platinum Select Mastercard® Secured Credit Card
  • Regular Purchase APR 13.99% variable based on the Prime Rate
  • Cash Advance APR 19.99% variable based on the Prime Rate
  • Annual Fee $39
  • Credit Needed Poor , No Credit Required
  • Processing Network Mastercard
Best Benefits
  • No Credit History or Minimum Credit Score Required for Approval
  • Quick and Complete Online Application
  • Full-Feature Platinum Mastercard® Secured Credit Card
  • Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
  • 24/7 Online Access to Your Account
Rates & Fees
  • Regular Purchase APR: 13.99% variable based on the Prime Rate
  • Cash Advance APR: 19.99% variable based on the Prime Rate
  • Cash Advance Transaction Fee: Either $10 or 3% of the amount of each cash advance, whichever is greater
  • Annual Fee: $39
  • Foreign Transaction Fee: 3% of the transaction amount
  • Late Payment Penalty Fee: Up to $40
  • Return Payment Penalty Fee: Up to $29
  • Minimum Deposit Required: $200

Perhaps the most popular secured card offer is the OpenSky Visa from Capital Bank. The card requires no credit check, features a modest $35 annual fee, and has a modest fixed APR. The real value with the OpenSky Secured Visa, however, is the access to an extensive Knowledge Base archive. This tool helps those with poor credit to gain financial confidence and boost their credit score with best practices.

OpenSky® Secured Visa®

No Credit Check to Apply

OpenSky® Secured Visa®
  • Regular Purchase APR 17.39% variable based on the Prime Rate
  • Cash Advance APR 17.39% variable based on the Prime Rate
  • Annual Fee $35
  • Credit Needed Poor , No Credit Required
  • Processing Network Visa
Best Benefits
  • Build credit with on-time payments
  • Reports to the three leading credit bureaus
  • Credit limist between $200 and $3,000
  • Visa benefits and protections
Rates & Fees
  • Regular Purchase APR: 17.39% variable based on the Prime Rate
  • Cash Advance APR: 17.39% variable based on the Prime Rate
  • Cash Advance Transaction Fee: Either $6 or 5% of the amount of each cash advance, whichever is greater.
  • Annual Fee: $35
  • Foreign Transaction Fee: 3% of each transaction in U.S. dollars
  • Late Payment Penalty Fee: Up to $38
  • Return Payment Penalty Fee: Up to $25
  • Minimum Deposit Required: $200
Credit Card Deals
  • Complimentary EZ Mini Crunchies (60g) when you spend S$120 - Offer Expires on December 31, 2020 - See Details
  • 10% off museum entry - Offer Expires on December 31, 2020 - See Details
  • Save up to 55% on London theater tickets - Offer Expires on December 31, 2020 - See Details
  • Save an extra 10% on Tower of London access tickets - Offer Expires on December 31, 2020 - See Details
  • Save 5% with Alamo® at participating locations - Offer Expires on December 31, 2020 - See Details
  • Save 5% with Enterprise Rent-A-Car® at participating locations - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% on The Paris Explorer Pass - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% on The London Explorer Pass - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% when you purchase your Go Barcelona Pass - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% when you purchase your Go Bangkok Pass - Offer Expires on December 31, 2020 - See Details
  • View All Deals -

In general, secured cards offer the following benefits vs unsecured credit cards:

  • Lower annual fees
  • Lower APR
  • Easier to get than unsecured cards
  • Some offer the chance to graduate to an unsecured card

Why Choose an Unsecured Card Over a Secured Card?

Unsecured credit cards are a great option for those who can’t afford the security deposit of a secured card – or prefer not to pay one.

Because unsecured credit cards are for people with bad credit scores, they typically have lower credit limits than other card types. Cards like the Total Visa come with an initial $300 credit line. While this may not seem impressive, it is a $300 line without the need for a deposit, meaning there is no out-of-pocket expense.

Total Visa® Unsecured Credit Card

Reports Monthly to All Three Major Credit Bureaus

Total Visa® Unsecured Credit Card
  • Regular Purchase APR See Terms*
  • Cash Advance APR See Terms*
  • Annual Fee See Terms*
  • Credit Needed Fair , Poor
  • Processing Network Visa
Best Benefits
  • Fast and easy application process; response provided in seconds
  • A genuine Visa® card accepted by merchants nationwide across the USA and online
  • Manageable monthly payments
  • $300 credit limit (Subject to available credit)
  • Select your favorite card design from our gallery, for free!
Rates & Fees
  • Regular Purchase APR: See Terms*
  • Cash Advance APR: See Terms*
  • Cash Advance Transaction Fee: See Terms*
  • Annual Fee: See Terms*
  • Late Payment Penalty Fee: See Terms*
  • Return Payment Penalty Fee: See Terms*
Credit Card Deals
  • Complimentary EZ Mini Crunchies (60g) when you spend S$120 - Offer Expires on December 31, 2020 - See Details
  • 10% off museum entry - Offer Expires on December 31, 2020 - See Details
  • Save up to 55% on London theater tickets - Offer Expires on December 31, 2020 - See Details
  • Save an extra 10% on Tower of London access tickets - Offer Expires on December 31, 2020 - See Details
  • Save 5% with Alamo® at participating locations - Offer Expires on December 31, 2020 - See Details
  • Save 5% with Enterprise Rent-A-Car® at participating locations - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% on The Paris Explorer Pass - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% on The London Explorer Pass - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% when you purchase your Go Barcelona Pass - Offer Expires on December 31, 2020 - See Details
  • Save an extra 5% when you purchase your Go Bangkok Pass - Offer Expires on December 31, 2020 - See Details
  • View All Deals -

The Reflex Mastercard is another popular option for those with bad credit scores. The Reflex comes with an equal credit line starting at $300 and can range up to $750 depending on creditworthiness.

Reflex Mastercard® Credit Card

All Credit Types Welcome to Apply

Reflex Mastercard® Credit Card
  • Regular Purchase APR See Terms*
  • Cash Advance APR See Terms*
  • Annual Fee See Terms*
  • Credit Needed Good , Fair , Poor
  • Processing Network Mastercard
Best Benefits
  • See if you’re Pre-Qualified with no impact to your credit score
  • Free access to your Vantage 3.0 score from TransUnion* (When you sign up for e-statements)
  • Monthly reporting to the three major credit bureaus
  • Use your card at locations everywhere Mastercard® is accepted
Rates & Fees
  • Regular Purchase APR: See Terms*
  • Cash Advance APR: See Terms*
  • Cash Advance Transaction Fee: See Terms*
  • Annual Fee: See Terms*
  • Foreign Transaction Fee: See Terms*
  • Late Payment Penalty Fee: See Terms*
  • Return Payment Penalty Fee: See Terms*

Other popular unsecured cards for bad credit include the Milestone Gold Mastercard, the Indigo Platinum Mastercard, and the First Access Solid Black Visa. These cards all offer reasonable credit limits, the chance at limit increases with on-time payments, and all the benefits that come with Visa or Mastercard products.

In general, unsecured cards offer the following benefits vs secured cards:

  • No security deposit needed
  • A chance at credit limit increases with on-time payments
  • Variable APR

Other Unsecured Cards to Consider

A unique subset of unsecured cards for bad credit is what is known as “catalog cards.” These cards provide an unsecured credit line towards an online shopping portal. Catalog cards are not accepted everywhere, like a Visa or Mastercard, but they can build credit with on-time payments and regular reporting to the major credit bureaus.

The Horizon Gold Card is the most popular of the catalog cards. The card, along with its sibling, the Group One Platinum Card, offers a $500 unsecured line of credit for use at the Horizon Outlet. The Horizon Outlet catalog is full of quality items, including home goods, toys, and fashion for men, women, and children.

Both the Horizon Gold and Group One Platinum are an excellent jumping-off point for those who don’t want a secured card but are unsure if they qualify for a regular unsecured card.

Horizon Gold Card

No Credit Required

Horizon Gold Card
  • Annual Fee None
  • Credit Needed No Credit Required
Best Benefits
  • 0% purchase APR
  • No credit check required
  • Fast online application
  • Includes access to My Privacy Protection, My Universal RX, My Roadside Protect and My Legal Assistance benefits
Rates & Fees
  • Late Payment Penalty Fee: $20
  • Return Payment Penalty Fee: $25

Group One Platinum Card

No Credit Required

Group One Platinum Card
  • Annual Fee None
  • Credit Needed Poor , No Credit Required
Best Benefits
  • $500 credit limit
  • No employment or credit check to apply
  • Reports activity to major credit bureau
  • Fast and easy application
Rates & Fees
  • Late Payment Penalty Fee: $20
  • Return Payment Penalty Fee: $25

Related Article: What Credit Cards Can I Get with Bad Credit?

About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident rewards expert, covering all facets of the points game – especially travel, hotels, and airlines. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.