Secured Credit Cards vs. Unsecured Credit Cards

Created on 07 Feb 2024

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When it comes to managing your finances, credit cards can be a useful tool. They provide convenience, flexibility, and the opportunity to build your credit history. However, not all credit cards are created equal. There are two main types of credit cards: Secured and unsecured. Understanding the differences between these two options is crucial in making the right choice for your financial situation.

Secured credit cards require a security deposit that acts as collateral for the credit limit. This deposit is usually equal to the credit limit or a percentage of it. On the other hand, unsecured credit cards do not require a security deposit. Instead, the credit limit is determined by the lender based on various factors such as credit history, income, and overall financial health.

Table of Contents

​​​​​​​Differences between Secured and Unsecured Credit Cards

Feature

Secured Credit Card

Unsecured Credit Card

Credit Requirement

Lower credit score is required

Higher credit score is required

Interest Rate

Typically, higher interest rate

Typically, lower interest rate

Security Deposit

Required

Not required

Credit Limit

Lower credit limit

Higher credit limit

Approval qualification

Easier to qualify with poor or no credit

Considers your credit score, income and credit history

Pros and Cons of Secured Credit Cards

Pros:

Cons:

​​​​​​​Pros and Cons of Unsecured Credit Cards

Pros:

​​​​​​​Cons:

​​​​​​​Factors to consider when choosing between a Secured and Unsecured Credit Card

Choosing between a secured and unsecured credit card depends on your financial situation and goals. Here are some key factors to consider:

1. Your credit history:

2. Your budget:

3. Your financial goals:

4. Other factors:

Best Secured Credit Cards

1. IDFC FIRST WOW Credit Card

The IDFC FIRST WOW Credit Card is a great option for those who want a combination of rewards, privileges, and convenience. It is a popular choice for people who are looking for a card that does not charge any joining or renewal fees, offers reward points on everyday spending, and comes with some additional perks. Below is a breakdown of the card's key features and benefits:

Read IDFC FIRST WOW Credit Card full review.

2. SBI Unnati Credit Card

The SBI Unnati Credit Card is a good option for people who are new to credit or have a poor credit score. It has a number of features and benefits that can help you build your credit score and save money. Some of the features are:

Read more about Best Secured Credit Cards.

Best Unsecured Credit Cards

1. SBI Cashback Credit Card

The SBI Cashback Credit Card is a no-frills card that offers straightforward cashback on your spending. Here's a breakdown of its key features and benefits:

2. HDFC Millennia Credit Card

The HDFC Millennia Credit Card is a great option for people who want to earn cashback on their everyday spending. It has a low annual fee and offers a variety of features and benefits that make it a valuable card to have in your wallet. Here are some of the key features and benefits:

3. Amazon Pay ICICI Credit Card

The AmazonPay ICICI Credit Card, issued by ICICI Bank in partnership with Amazon and Visa, is a co-branded credit card offering various benefits for frequent Amazon shoppers and those who prefer contactless payments. Here's a breakdown of its key features and benefits:

Conclusion

In conclusion, choosing between a secured and unsecured credit card is a decision that should be based on your financial situation, credit history, and long-term goals. Secured credit cards can be an excellent option for individuals with limited or poor credit history, as they offer an opportunity to build or rebuild credit. Unsecured credit cards, on the other hand, provide more flexibility and convenience but require a stronger credit profile.

Consider factors such as your credit history, financial situation, and long-term goals when making this decision. Compare the pros and cons of secured and unsecured credit cards, and evaluate the requirements and benefits of different card options.