Secured Credit Card vs Unsecured: What’s the Difference?

What is a Secured Credit Card?

A secured credit card is a type of credit card that requires you to put down an upfront cash deposit, usually equaling the amount of your credit limit.

How Does a Secured Credit Card Work?

Secured credit cards work by having the cardholder front a required deposit to open an account, reducing the risk to the credit card issuer of you defaulting or missing a payment.

What is an Unsecured Credit Card?

This type of card has a higher risk to lenders because they rely on your credit history and your ability to repay.

How do Unsecured Credit Cards Work?

They work by providing you with a revolving line of credit, meaning you can spend up to an approved amount without making a payment within a monthly billing cycle.

Secured Credit Card vs. Unsecured Credit Card

The key differences between secured credit cards vs. unsecured cards come down to: - The upfront deposit you must pay to open a secured credit card - Rewards program offerings - Annual fee options and - Available credit limits

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