Secured vs Unsecured Credit Card

Secured vs Unsecured Credit Card Differences

Secured credit cards are just like a deposit that a person does in a bank and in lieu of that, they will get a credit card against that amount of deposit. On the other hand, unsecured credit cards are those kinds of credit cards that do not depend on the fixed amount and are mainly given on the salary band and the credit score of a customer

In this article, we look at the key differences between secured credit card vs unsecured credit card

Secured vs Unsecured Credit Card Infographics

Here we provide you with the top 5 difference between Secured vs Unsecured Credit Card

Secured vs Unsecured Credit Card – Key Differences

The key differences between Secured vs Unsecured Credit Card are as follows –

• Secured credit cards are fairly easy to get when compared with unsecured credit cards as the customer is getting a limit against the fixed deposit he has deposited with the bank which makes the creditworthiness of the customer good also the bank has less risk on the cards issued. On the contrary unsecured credit cards are difficult to get as a number of documents are required to be submitted with the bank such as the credit score, salary slip, income tax proof, and other documents
• In secured credit card, the amount of deposit which is submitted with the bank determines your limit of the credit card they are also known as a chance card for a reason. On the other hand, the credit limit of an unsecured credit card is at the discretion of the bank and the bank determines the credit limit of that user which is based on a number of factors such as credit score, salary drawn by the customer and past credit history
• Using a secured credit card will help the user to live within the means of his financial capabilities as it does not have the facility of an overdraft and the usable amount is only restricted to the amount which is deposited in the fixed deposit. On the other hand, an unsecured credit allows you to extend your means beyond your credit holding limit

Secured vs Unsecured Credit Card Head to Head Differences

Let’s now look at the head to head difference between Secured Credit Card vs Unsecured Credit Card

Secured Credit Card		Unsecured Credit Card
A secured credit card is backed by a cash deposit in the bank and the bank issues a card with that limit to the customer		An unsecured credit card is not backed by any cash deposit needs to be submitted with the bank
Secured credit card the bank demands for a collateral		There is no collateral involved in unsecured credit cards
Secured credit cards often do not have any rewards point and other fringe benefits associated with their cards		Unsecured credit cards have a variety of fringe benefits such as reward points, special discounts when payment done with the cards. Cashback opportunities etc
Secured credit cards have generally issued that kind of person who post-bankruptcy has a bad credit cycle and credit history		Unsecured credit cards offer benefits and are generally issued to those who have a good credit history and a high creditworthiness
There are usually high annual fees involved in these kinds of credit cards		Unsecured credit cards usually involved low annual fees, as well as there, are not much of hidden charges charged by the bank

Conclusion

A good credit card is the one which helps the user according to the risk appetite financial stability of the customer and its spending patterns. Customer having similar and recurring spending patterns should opt for a secured credit card as there is not much of a change in the spending pattern of a customer on a month on month basis. On the other hand, if the customer has a good track record of spending and paying off his debts on time then he should opt for an unsecured credit card where the user has an unusual spending pattern and a good credit score.

There are nowadays various banks offering various credit cards. If the user often uses the same portal on a frequent basis he should opt for a credit card which has an association with that particular vendor.

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