Secured vs unsecured credit card: what are the differences?

Gabriela Peratello

New to the US and looking at getting a credit card? Or maybe you’ve simply never needed a credit card before and you’re interested in the difference between secured credit cards vs unsecured cards? This guide has all you need to know.

We’ll walk through the difference between secured vs unsecured credit cards, and we’ll also introduce Wise as a great way to use your card to send payments overseas, with the Google exchange rate and no hidden fees.

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Secured vs unsecured credit cards: overview

We’ll unpack the details of secured credit cards vs unsecured cards in just a moment — first a quick overview to give you a flavor.

Secured credit cardsUnsecured credit cards
Best forBuilding a US credit score quicklyEasy spending and reward opportunities
EligibilityBased on ability to pay upfront security depositBased on US credit score and credit history

APR can be high

No annual fee cards are common, but penalty fees and cash advance costs apply

Variable APRs, based on credit score

Annual fee varies based on card type, penalty fees and cash advance costs also apply

LimitsLimit is the same as your security deposit — often pretty lowLimits based on your creditworthiness

What is a secured credit card and how does it work?

You can use a secured credit card much like any other payment card, for spending in stores and online, and making cash withdrawals.

However, a secured credit card is different to an unsecured card in that you’ll need to pay an upfront security deposit to get a card, and your card spending limit will be set to the same amount as the deposit you’ve handed over.

Once you have your secured credit card it works much like a regular credit card. You can use your card to spend up to your spending limit every month, and repay the amount in full at the end of the period to avoid penalty charges and interest.

If you don’t pay back the full amount you’ll be liable to pay interest on the outstanding amount, and your spend limit will be reduced for the following month.

The key difference with a secured vs unsecured credit card, then, is the security deposit you’ve paid upfront. This is often used in cases where the applicant has no or a low credit score in the US.

Your secured card spending is then reported to one or more credit scoring agencies. If you continue to use your card responsibly, you’ll see your credit score improve — and can transition onto an unsecured card and reclaim your security deposit if you wish to do so.

Why would you get a secured card?

Secured cards don’t require a high credit score, or comprehensive local credit history in the US. This makes them a popular option with newcomers to America, or for people who have never previously accessed any credit services in the US.

Once you get your secured card you’ll be able to use it responsibly — and your spending history will be reported to one or more of the 3 major credit bureaus in the US.

This starts to quickly build a credit score and credit history, which can mean you’re able to move to an unsecured card in as little as 6 months.

Even if you don’t want or need to get an unsecured credit score, having a good credit history is useful.

Credit scores are used when you access other loan products, like unsecured consumer loans and mortgages, and sometimes when you are looking to rent a property, or even get some jobs which work with money or in financially responsible fields.

What are the advantages and disadvantages of a secured credit card?

✅ Pros❌ Cons
  • Good way to build credit to get an unsecured card in future

  • Some cards have reward options

  • No annual fee cards are common

  • Can have a fairly high APR

  • You’ll need to pay a security deposit and your credit limit will usually be quite low

Secured credit card examples

Not sure which unsecured card might be best for you? Here’s a head to head comparison on some key features, looking at some of the best secured credit cards out there.

You can also read more in our handy guide to the best secured credit cards available in the US.

Discover® It! Secured Card¹Capital One® Platinum Secured Card³Citi® Secured MasterCard⁴

No annual fee, with reward opportunities

Security deposit can be as little as 200 USD

No annual fee

Security deposit can be as little as 49 USD

No annual fee

Security deposit from 200 USD to 2,500 USD


No annual fee

Late payment up to 41 USD

Cash advance 10 USD or 5%

No annual fee

Late payment up to 40 USD

Cash advance 3 USD or 3%

No annual fee

Late payment up to 41 USD

Cash advance 10 USD or 5%


Variable 27.49% on purchases²

Variable 29.49% on cash advances

Variable 29.74%Variable 26.99%

Card use reported to all major credit bureaus

Move to an unsecured card in as little as 7 months

Low minimum security deposit options

Relatively low cash advance fees

Move to an unsecured card in as little as 6 months

Card use reported to all major credit bureaus

FICO score available

Pick your own billing date

ConsRelatively high APRNo reward earning opportunityDepending on your credit limit you may need a high security deposit

What is an unsecured credit card and how does it work?

Banks and card issuers often have dozens of different types of unsecured credit cards on offer — these cards don’t have a security deposit like a secured credit card, but instead rely on your credit score or credit history to assess suitability.

When you apply for an unsecured credit card, the bank or card issuer will run a credit check to decide if you’re sufficiently creditworthy for the card — and what your spending limit may be.

Different cards have their own requirements for credit score — so you’ll see some marked as requiring a ‘good’ or ‘excellent’ credit score for example.

You’ll be able to see your credit score through an organization like FICO⁶ — get an account for free, or pay a fee to get more features, and see your score for one or more of the leading US credit bureaus.

As with secured credit cards, once you have your card in your hands you can use it to spend online and in person and to make cash withdrawals, to your credit limit.

At the end of the month you’ll get your card bill and can repay in full, or pay a minimum amount plus interest on the outstanding portion of your bill. As you spend you may be able to earn miles, cashback or rewards, depending on the card you select, too.

Why would you get an unsecured card?

There are some key advantages when it comes to unsecured vs secured credit cards. For one, you’ll often find the APR on offer is lower.

You’ll also have a far greater range of card types to pick from, which can include no annual fee plans, and cards with some high reward earning opportunities.

You’ll usually have a far higher credit limit compared to a secured card, too — and as long as you’re using your card responsibly and repaying every month, your credit score will continue to improve over time.

What are the advantages and disadvantages of an unsecured credit card?

✅ Pros❌ Cons
  • No collateral needed, and high credit limits on offer

  • Depending on creditworthiness you may get a relatively low APR

  • Lots of ways to earn rewards, cashback and miles

  • You’ll pay late payment and penalty fees if you miss a bill

  • APR can be high, depending on the card and your credit score

Unsecured credit card examples

Considering getting an unsecured credit card and not sure which might suit you? Let’s look at a side by side comparison of some popular unsecured cards, all of which have their own unique features to suit different customers.

Citi Custom Cashback Card⁷Discover It Miles⁸Capital One Savor Rewards⁹
FeaturesCashback card which adapts to your spending, to make sure you maximize rewardsEarn 1.5x miles per dollar, to redeem at home and abroadEarn high cash back on eating out and dining in

No annual fee

Late payment up to 41 USD

Cash advance 10 USD or 5%

No annual fee

Late payment up to 41 USD

Cash advance 10 USD or 5%

95 USD annual fee

Late payment up to 40 USD

Cash advance 3 USD or 3%

APRVariable 18.49% — 28.49%

Variable 16.49% — 27.49% on purchases

29.49% on cash advances

20.24%, 25.24% or 28.24% depending on creditworthiness

28.24% on cash advances


Earn up to 5% cashback on your most popular spend categories

Introductory APR may apply, which reduces costs

Earn miles and cash them in easily, with different reward options

No foreign transaction fee

High rewards on certain lifestyle categories

No foreign transaction fee

ConsVariable APR which can be on the high sideDiscover may not be globally acceptedExcellent credit rating required

Unsecured vs secured credit cards: main differences

Here’s a rundown of some key features, and how they compare for unsecured vs secured credit cards, to help you decide which is for you.

Secured credit cardsUnsecured credit cards
AvailabilityMost card companies and major banks offer at least oneHuge array of different cards to suit individual customer needs
BenefitsBuild credit score quickly to access unsecured cards and loans more easily in futureSpread the cost of purchases over time, with no upfront security deposit
Security depositUsually 49 USD - 2,500 USD — refunded when you close your cardNot needed
APRCan be highVariable, based on credit score
Reward opportunitiesNot often availableVery frequently available
Fees and limits

No annual fee cards are common, but penalty fees and cash advance costs apply

Limit is the same as your security deposit — often pretty low

Annual fee varies based on card type — usually cards with higher reward earning opportunities have a higher charge — penalty fees and cash advance costs also apply

Limits based on your creditworthiness

Secured vs unsecured credit cards: what's best for your credit?

Used responsibly, both secured and unsecured credit cards can help you establish and build a US credit score with one or more of the major credit bureaus.

Secured credit cards are usually the best option for people with a low — or no — US credit score, as they offer a quick way to build a decent score and transition to unsecured products.

If you already have a good credit score, an unsecured card can be used to continue to log your credit history, while earning rewards and accessing a higher credit limit.

Make international payments via credit card with Wise

Need to send a payment overseas? Choose Wise for an easy way to send money abroad. You can pay via credit card — both secured and unsecured — as well as debit card, ACH and wire transfers.

With Wise you get the mid-market exchange rate whenever you switch from dollars to the currency you need, with low, transparent fees¹⁰ and a fast delivery time.

Register a Wise account online or in the Wise app, then enter your payment details to generate an instant quote which shows you exactly how much you’ll pay for your transfer, and exactly how much the recipient will get in their bank account, in their preferred currency.

You’ll also be able to see a delivery estimate — which could even be instant or within just a few minutes¹¹. Pay with your credit card, and you’re done.

Need more? Wise also offers:
  • Multi-currency accounts to hold and exchange 50+ currencies and get paid fee free in 10 currencies

  • International debit cards to spend in 170+ countries, with the Google exchange rate and low fees from 0.41% for currency conversion

  • Business accounts and services for freelancers, sole proprietors and company owners around the world

Get started with Wise
in just a few clicks

Both secured and unsecured credit cards can be handy ways to spend and withdraw money, at home and abroad.

Use this guide to decide which might suit you better — and don’t forget, if you’re sending a payment overseas using your credit card, you could get a better exchange rate and a lower overall cost if you pick Wise.


  1. Discover it Secured Credit Card
  2. Discover Secured Card - Rates
  3. Capital One Platinum Secured Card
  4. Citi Secured Card
  5. Citi Secured card fees
  6. FICO score
  7. Citi Custom Cashback Card
  8. Discover it Miles
  9. Capital One Savor Rewards
  10. Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information
  11. The speed of transaction claim depends on funds availability, approval by Wise's proprietary verification system and systems availability of our partners' banking system, and may not be available for all transactions

Sources checked on 03.03.2023

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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