Secured vs. Unsecured Credit Card: How To Choose

Written by Banks Editorial Team
3 min. read
Written by Banks Editorial Team
3 min. read

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If you’re in the market for a new credit card, you may be torn between a secured and unsecured option. How do they differ? Is one a better option than the other? Does the application process differ? Are the terms comparable? In this guide, you’ll learn the answers to these questions and more to help you make an informed decision. 

Get a Digital Credit Card
Access a revolving line of credit based on your cash flow, not your credit score, with the Grain digital credit card.

What Is a Secured Credit Card?

A secured credit card is a debt product readily available through many banks and credit card companies. You’ll need a security deposit to open the account, and it’s typically equivalent to your credit limit. The card is designed to help build or repair your credit and can be used to make in-store and online purchases. You’ll get a billing statement each month that includes the minimum monthly payment requirement and due date. 

What Is an Unsecured Credit Card?

Also offered by banks and credit card issuers, unsecured credit cards operate just like secured cards. You can use them anywhere they’re accepted and build credit over time with responsible use, just ensure that payment activity is reported to the three major credit bureaus – Experian, TransUnion and Equifax. The key difference is that you won’t need a security deposit to open a credit card. 

Secured vs. Unsecured Credit Card

Here are some additional key differences between secured and unsecured credit cards. 

Credit Checks and History

You’ll need good or excellent credit to qualify for an unsecured credit card with favorable terms. However, secured credit cards are accessible to people with less than perfect credit scores. 


Credit limits are typically more generous on unsecured credit cards. But if you opt to make a higher security deposit, you can potentially unlock a higher credit limit. 


You’ll generally pay fewer fees with an unsecured credit card. Still, there are unsecured credit cards that do not come with monthly maintenance fees or exorbitant annual fees. 

Interest Rates

It’s not uncommon for interest rates to be lower on unsecured credit cards. Although unsecured cards pose a lower risk to the credit card issuer since they have collateral to fall back on, borrowing costs are still higher as these debt products cater to credit-challenged customers with a higher risk of default. 


Most secured credit cards do not offer incentives to cardholders. The good news is that if you’ve upgraded to an unsecured credit card, you could be eligible to earn valuable rewards. 

Get a Digital Credit Card
Access a revolving line of credit based on your cash flow, not your credit score, with the Grain digital credit card.

When to Use a Secured Credit Card

These circumstances warrant the use of a secured credit card: 

  • You’re a credit newbie and can’t qualify for an unsecured credit card. 
  • You want to build or improve your credit health. 
  • You struggle to keep your spending under control as they typically come with lower credit limits. 

When to Use an Unsecured Credit Card

An unsecured credit card could be a better fit in these situations: 

  • You have good or excellent credit and solid credit history. 
  • You’re disciplined enough not to overspend, despite having a higher credit limit. 
  • You don’t have the funds available to make a security deposit. 
  • You prefer a rewards credit card to earn cash-back or points. (Note: Some secured credit cards offer rewards to cardholders but often come with a steep annual fee). 

Get A Line of Credit Without Applying for a Credit Card

Ultimately, deciding which type of credit card is best is a personal decision. Be sure to compare your options and get approved with your top options to find the best fit. 

But if you’d prefer not to apply for a credit card, you still have options to get the credit you need. Check out what the Grain financial app has to offer. It’s a digital credit card or line of credit that you can unlock based on your cash flow. There’s no credit check, and most consumers receive a lending decision right away. 

Here’s how Grain works: 

  • Step 1: Download the app from the App Store on your iPhone or iPad and apply for a digital revolving line of credit. 
  • Step 2: If approved, sync your primary checking account with Grain. (The platform seamlessly connects with over 10,000 banks nationwide). 
  • Step 3: Initiate instant transfers from your Grain account to your personal checking account and use your debit card to make in-store or online purchases. 

Grain is currently available to consumers in all 50 states. If you don’t have access to an iPhone or iPad, feel free to join the Android waitlist to be notified when the app becomes available to you. 

Get a Digital Credit Card
Access a revolving line of credit based on your cash flow, not your credit score, with the Grain digital credit card.

Disclaimer: Credit offer based on cash flow in the linked checking account and may require a credit check. All accounts are subject to ID verification and approval. See your Credit Agreement and Terms of Service for further details.

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