What Is A Secured Credit Card? Who Should Apply?

Are you a young adult trying to figure your way through life? Are you suffering from lack of credit? How to get credit for young individual? I know you will have a lot of issues going through in your mind. You may be fully ready to make a huge significant purchase and then come to terms with the lack of credit situation. It is definitely a major hurdle. What is a secured credit card? That is your savior!

People re-building from poor credit also face the same hurdles irrespective of their age. Thankfully for both groups, a secured credit card allows each to start (or restart) their credit journey with the goal of financial independence. How do secured credit cards work? Let’s take a closer look.

Possessing a no credit or bad credit history can stop you from gaining access to the finest rewards credit cards. In fact, you might not even get approval for a particular credit card.

The overriding thought in your head is the following – How do I improve my credit score when I can’t even get approval for a credit card? If you don’t want your credit history to dictate your future, invest in a secured credit card.

The question is – What is a secured credit card?

Here’s an elaborate post that covers all the vital aspects that you need to be aware of.

What is a secured credit card?

Making wise financial decisions can secure you and your family’s future. There are times when we make hasty and bad financial decisions.

Building a good credit profile is important. It allows you to recuperate bad credit. Secured credit card enter the scene as a knight in shining armor. Secured credit cards are often called the “credit builder credit card. These are quite similar to the unsecured/regular cards, but the applicants have to make a deposit of $200 (minimum amount) to open the card.

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Credit Builder Credit Card
Credit Builder Credit Card

Why do the issuers charge a minimum amount? They hold this amount just in case you are unable to pay the bill. And, it also dictates the applicant’s credit limit. Basically, the more money you deposit, the higher the limit would be. If you are depositing a low amount, then you will have a low credit limit.

Most people would view the deposit as a downside. But, on the contrary, the deposit allows the customers/applicants to secure their credit line. The card issuer will be protected in case the customer defaults.

Who should go for a secured credit card?


This is one of the most relevant questions. Who should opt for it?

Secured cards are for individuals who have:

Having a low credit score is not the best situation to be in. If you wish to rebuild or create a good credit history, the secure card would be a wise investment.

Perhaps, it is the only option you have. As a law abiding citizen, you must never default in making payments. Banks want to see that you have handled the credit score responsibly. Based on this, they will give you approval to gain access to a regular credit card.

The secured Vs unsecured credit card debate is always on. Please note that one of the key differences between the two is that the former one asks for a deposit. Moreover, secured credit cards are accessible for people who have a credit score of 579 or lower. The minimum credit score to gain access to an unsecured credit card is 670+.

Another pointer hovering over your mind is the following – Secured Vs Prepaid Debit – Who wins the battle?

As good financial planners, we would suggest to opt for a secured card as it helps in building credit. The latter does not help in doing so. There are no rewards, benefits, and programs which makes it a poor choice. Of course, if you wish to opt for controlled spending, then the prepaid debit card is a good choice.

Secured Credit Card Pros

Here’s a list of the pros we gathered for prospective applicants. This will help you to compare secured, unsecured, and prepaid debit cards.

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The Pros are the following:

  • People with bad, no, or little credit limit can qualify for this.
  • The issuer may not do a credit check.
  • It helps in building a GOOD credit history. After all, it is called CREDIT BUILDER for a reason.
  • It is widely accepted. However, it should be affiliated to a bigger network such as MasterCard or VISA.

Secured Credit Card Cons

No matter what you invest in, it will come with its share of CONS. Let’s take a quick look!

The Cons are the following:

  • You need to deposit a minimum amount.
  • The credit limit might be low (depends on the deposit you make)
  • The interest rates are high.
  • Rewards might be fewer as compared to an unsecured credit card.

How To Convert A Secured Credit Card To An Unsecured Credit Card?


Considering an unsecured credit card offers more rewards, you might want to transition to an unsecured credit later with the all-new credit history.

Once you build a good credit history (thanks to secured card), you will be able to transition from secured credit card to unsecured credit card.


How does that happen?

  1. You can request the card issuer to transfer the line of credit from a secured card to an unsecured card.
  2. You can apply for a new unsecured credit card after building a ‘good’ credit history. Make sure you close the secured one after you get approval for an unsecured credit card.
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Note: If you close the account of the secure card in an ideal standing, you will get full credit card security deposit back

Concluding Thoughts

We hope this post helped you to understand the concept of a secured card.

Gaining access to this is easier as credit checks may not be a part of the process. Speak to different issuers and you shall get approval.

Building a good credit score via a secured card will help you gain access to an unsecured one.

Compare all the top offers in the credit card market and opt for the best. When you are comparing the offers, look for the following qualities:

  • Prequalification – The issuer performs a soft credit check and tells you whether you are a good candidate or not.
  • Deposit – Some of the issuers give you an option of making the deposit amount in install
  • High credit limit – It is rare, but you can still find an issuer that offers a high credit limit on a low deposit.
  • Fees – Annual fee is quite common. But, there are maintenance fee, application fee, and a lot more that you need to be aware of.
  • Rewards – These will be rare because an unsecured credit card would give you more benefit. But, there is no harm in checking what rewards you get.

By looking over the qualities of the secured credit card, the process of applying for one will become easier.

So, don’t waste time, and apply for a secured credit card today. This is YOUR time to build a good credit score and change your credit history!

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