There has been multiple questions about the difference between secured and unsecured credit card. We have already discussed the subjects separately on this platform, with extensive examples explaining their characteristics.
However, the question what is the difference between secured and unsecured credit cards? Has a simple and straight forwards answer, of which will be shared on this article. We are also going to be outlining some of the difference as well as the similarities these two types of credit cards has.
The fact remains that, there is a thin line between a secured and unsecured credit card. This being that, while one is issued to credit risk individuals, the other is issued to almost anybody who applies for it.
While some secured cards accepts initial deposit inform of security deposit, unsecured card care less for that. Despite these, there are still similarities in features.
All that has been said above has answered or has answered our question in bit. However, to provide a thoroughbred answer to the question on this post “what is the difference between secured and unsecured credit cards?” see below..
Difference Between Secured And Unsecured Credit Cards
As explained earlier, one can find the differences between these two card by looking out for their characteristics and features, these details tells you which is what, below are a few differences you will notice on these cards;
- Security deposit – For a secured card, they are mostly given to people who are credit risky, in essence, they have bad credit history hence an initial deposit which serves as a collateral will be accepted from them, however, on the other hand, unsecured card does not required a security deposit before they are issued by the issuing company, explains the reason why most people prefer it. They are most likely the real credit cards.
- Annual fees – A secured credit card is likely to charge for annual fee, either monthly or annually, this is usually made to keep some certain level of commitment by the card holder, while an unsecured credit card mostly does not require annual fee payments, in situation where they are, it is usually from the second year of card use.
- Rebuilding Option – The credit score rebuilding potential is very high with a secured credit card than with an unsecured credit card, since the former is issued to credit risk individual while the later is assumed to have a stellar credit history.
- Rewards options – Most secured card does not offer card bonuses and miles rewards unlike the unsecured card where earning rewards are unlimited.
Similarities Between Secured And Unsecured Credit Card
Honestly, there are only major difference with so much similarities, as will be listed below, the main similarities of these cards includes the following;
- A part from the security deposit issued on a secured card, the card functions just like any other unsecured credit card, with both charged on purchases Annual Percentage Rate and other credit card fees.
- Rates and fees paid are determined by the issuing credit card companies, with an accessible pricing term.
The above differences and similarities will clearly suggest to you the clues you need to access a Secured And Unsecured Credit Card when the need arises.