A secured card is just a credit card that requires the cardholder to supply a deposit to the credit card lender. That deposit is used as a back up in case the cardholder defaults on their payments.
In most cases, the deposit amount is equal to the credit limit of the card. For instance, if you are approved for a credit limit of $500, then you would be required to supply the lender with a deposit of $500.
That’s easy enough to understand, right?
Once your credit score has improved to your liking, you then can choose to cancel your account, at which point your credit security deposit will be returned to you.
An unsecured credit card is really just a ‘typical’ card that most people associate with when they think of a Visa, Mastercard, or American Express. No security deposit is required. If you have been approved for such a card, then this would indicate that you have a decent credit score and probably don’t have any need for a secured card with a which requires a deposit.
However, if you still need to improve your score, and have not yet applied to any financial institutions, then you should consider choosing an unsecured card that will help you build better credit while simultaneously enjoying some earned perks that the secured cards don’t offer you.