What is an Unsecured Credit Card? What is a Secured Credit Card? [Infographic]

Using a secured credit card strategically and responsibly is one of the best ways you can build your credit. However, it’s important to know how to obtain and use one of these cards before pursuing this option.

A secured credit card is easy to obtain and can substantially improve your credit score when used correctly. However, it is important to understand how they work and how to use them before you proceed.

A secured credit card is a good way for those with little or no credit history to build credit. But there’s one major difference between a secured and an unsecured, or traditional, credit card. A secured credit card requires that some security, or collateral, be tied to it to minimize the card issuer’s risk. This collateral is in the form of a monetary deposit, which the card holder is required to make before they can start using a secured credit card. This deposit is typically equal to the credit limit of the secured credit card.