What is the Difference Between Secured and Unsecured Credit Cards

byDilip PrasadLast Updated: December 28, 2023
What is the Difference Between Secured and Unsecured Credit Cards
What is the Difference Between Secured and Unsecured Credit Cards

Credit cards are essential financial tools in today’s world, offering convenience and purchasing power. However, not all credit cards are the same. You might have heard about “secured” and “unsecured” credit cards. These terms represent two different ways to handle your finances.

In this guide, we’ll explore secured and unsecured credit cards. Whether you’re new to credit or rebuilding your financial history, understanding these cards is crucial. Let’s dive into the world of secured vs. unsecured credit cards to make informed financial decisions.

Secured Credit Card vs Unsecured Credit Card: Understanding the differences

Secured Credit Card

A secured credit card is a type of credit card that requires the cardholder to provide a security deposit, typically equal to the card’s credit limit. This deposit acts as collateral and reduces the risk for the credit card issuer. Secured credit cards are often used by individuals with limited or poor credit histories to build or rebuild their credit. They function like traditional credit cards, allowing users to make purchases and repay the borrowed amount, but they offer lower risk to the issuer due to the deposited funds. Responsible use of a secured credit card can help improve the cardholder’s credit score over time.

Unsecured Credit Card

An unsecured credit card is the standard type of credit card that does not require a security deposit. These cards are issued based on the cardholder’s creditworthiness, which is evaluated by factors such as credit history, income, and credit score. Unsecured credit cards provide a revolving line of credit that can be used for purchases, and the cardholder is required to make regular payments to repay the borrowed amount. Unsecured credit cards often offer various features and rewards, such as cashback, points, or miles, and are available to individuals with good to excellent credit profiles.

What is the Difference Between Secured and Unsecured Credit Cards?

The following table will help you identify the key differences between a secured and unsecured credit card quite effortlessly:

After going through the table above, you will have a clearer picture of whether to go for a credit card secured or unsecured. Now let’s know the individual application procedures so that you can finally start working on your creditworthiness. 

Read More: Difference between Soft Vs Hard Credit Check

How to Apply for a Secured Credit Card?

  • Research and Comparison: Start by researching and comparing different secured credit card options available in the market. Look at factors such as interest rates, annual fees, and credit limit.
  • Check Eligibility: Review the eligibility criteria for each card to ensure you meet the requirements. Criteria may include a minimum age, income level, and the need to maintain a Fixed Deposit (FD) with the credit provider.
  • Select a Card: Choose the secured credit card that best suits your needs and financial situation.
  • Visit Lender’s Website: Go to the official website of your chosen lender, where you intend to apply for the secured credit card.
  • Fill Application Form: On the lender’s website, locate the application form for the secured credit card. Provide your official name, contact details, address, and approximate annual/monthly income.
  • Deposit Requirement: If you do not have an existing FD with the credit provider, you will be asked to make a security deposit using your debit card details. This deposit is used as collateral against the card.
  • Approval: Once your cash deposit is approved, you will receive the secured credit card. Typically, you’ll have a credit limit of up to 85% of the deposited amount.

How to Apply for Unsecured Credit Card?

  • Comparison: Begin by comparing various unsecured credit card options available in the market. Evaluate factors like interest rates, annual fees, rewards programs, and credit limits.
  • Eligibility Check: Review the eligibility requirements for each unsecured card. These may include a minimum credit score, income level, and employment details.
  • Choose a Card: Select the unsecured credit card that aligns with your financial goals and credit profile.
  • Credit Report Review: Lenders for unsecured cards rely heavily on your credit history. Ensure your credit reports are accurate and up-to-date.
  • Prepare Documentation: Gather necessary documentation, which often includes recent bank statements, payslips, and proof of employment. Having these documents readily available can expedite the application process.
  • Apply Online: Visit the official website of your chosen credit card issuer and find the online application form.
  • Complete Application: Fill out the application form with accurate information, including personal details, financial information, and employment details.
  • Submit Application: Once your application is complete, submit it online.
  • Review and Approval: The credit card issuer will review your application and creditworthiness. If approved, you’ll receive your unsecured credit card.


Once you’ve thoroughly compared secured and unsecured credit cards and gained a comprehensive understanding of their features, you’ll be well-equipped to make informed choices when considering your next credit card. Moreover, you’re now aware that opting for a credit card secured by your Fixed Deposit offers dual advantages. Therefore, it’s advisable to make a prudent decision and select the credit card that aligns with your specific requirements for credit limit and urgency.

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