Key takeaways
Secured cards can be a practical first step toward stronger credit.
A secured credit card requires a refundable cash deposit that often sets your credit limit and protects the issuer.
On-time payments can help build positive credit history and may positively impact your credit score if your issuer reports them.
Unsecured cards don't require a security deposit but generally require higher credit scores to qualify.
You can usually get your deposit back by upgrading to an unsecured card or closing the account after paying the balance.
If you're building credit from scratch or rebuilding after a setback, a secured credit card can be a solid place to start. Secured credit cards require a refundable security deposit, which can help issuers approve people with limited or damaged credit histories. We'll walk you through how they work, how they compare with unsecured cards, and how to use one to build credit.
What makes a secured credit card good for building credit?
The best secured credit card to build credit reports your payments to Equifax®, Experian®, and TransUnion® – the three major credit bureaus. These companies collect your credit history and share it with lenders. Without that reporting, your on-time payments may not show up on your credit reports.
A strong pick also keeps costs low and asks for a deposit you can afford. It should spell out its APR and fees up front. APR, or annual percentage rate, is the yearly cost of borrowing on the card.
Look for a clear way forward, too. Some issuers review accounts for an upgrade to an unsecured card and refund your deposit. Use these five criteria to compare the best secured credit cards for your situation.
Credit bureau reporting: Confirm the issuer reports to Equifax®, Experian®, and TransUnion®. If the issuer reports, on-time payments can help build positive credit history.
Low or no annual fee: A lower annual fee leaves more of your money for your deposit and monthly payments.
Affordable deposit: Pick a card with a minimum deposit you can pay without straining your budget.
Upgrade or refund path: Check whether the issuer reviews accounts for an upgrade and returns your deposit.
Clear APR and fees: Read the card's terms so you know its APR, late fees, and other charges before you apply.
What is a secured credit card?
When you open a secured credit card, you'll put down a refundable cash deposit, which acts as collateral – money that backs what you borrow. If you can't pay your balance, the card issuer keeps your deposit rather than losing the money. It's like an insurance policy for the card issuer.
So, what happens to your deposit? The card issuer holds onto it while your account stays open. Refunds depend on your issuer's policies, but you can usually get it back in one of two ways:
Upgrade to an unsecured card: Your issuer may upgrade you if you use your card responsibly and then refund your deposit.
Close the account: Pay off any remaining balance first, or the issuer might keep your deposit to cover the debt.
How do secured credit cards work?
Your security deposit backs the line of credit on a secured credit card. The secured card lets you borrow from the issuer, and you pay back what you borrow over time.
Deposits often start around $200, though some cards ask for less. For example, Capital One® says its Platinum Secured card may require $49, $99, or $200, depending on your creditworthiness.
Your deposit often sets your credit limit. If you deposit $200, your credit limit may also be $200.
Your available credit shrinks as you make purchases and grows as you pay down the balance. If you fall behind on payments, the card issuer can use your security deposit to recover the outstanding balance.
You can use a secured card for purchases anywhere merchants accept its payment network. If your issuer reports your payment activity to the credit bureaus, on-time payments can help with building or repairing your credit score.
Pro tip: The longer your account stays open, the longer your credit history grows. A longer credit history may positively impact your credit score over time.
Unsecured vs. secured credit cards
Unsecured and secured credit cards have several differences. The table below shows them at a glance.
Unsecured credit card | Secured credit card | |
|---|---|---|
Security deposit required? | No | Yes |
Annual fees | Varies by card | Varies by card |
Average APR | ||
Builds credit history? | Yes, if the issuer reports | Yes, if the issuer reports |
Rewards program? | Yes | Some cards |
Good for | Unlocking additional rewards or card benefits | Establishing or rebuilding credit history |
The unsecured-card figure comes from Forbes Advisor’s October 26, 2026 report, whose overall average excludes secured, business, student, and corporate cards. The secured-card figure comes from WalletHub’s October 2026 data for new secured card offers. The sources use different samples and methods, so these figures provide general context. Actual APRs vary by card and applicant.
Unsecured cards don't require a security deposit, so issuers usually set stricter credit score requirements for them. Secured cards tend to be easier to qualify for but often come with lower credit limits.
Both cards work similarly day to day. You buy things up to a preset credit limit, then make payments to reduce your balance. Issuers of both card types typically share your payment history with the credit reporting bureaus.
Both secured and unsecured cards may charge annual fees. Unsecured cards often come with rewards programs, such as cash back or travel points. Some secured cards offer rewards.
Credit cards involve borrowing and repaying money, so they can help you build credit when you use them responsibly. They may also hurt your credit if you miss payments or often max out your limit.
Not sure which type fits you? Comparing secured and unsecured credit cards in more detail can help you decide.
Pros and cons of secured credit cards
Secured credit cards come with real upsides and a few trade-offs. Weigh both before you apply.
Pros | Cons |
|---|---|
Easier approval odds than many unsecured cards | Your cash stays tied up in the deposit |
Can help you build payment history | Lower credit limits |
Refundable deposit | Possible fees and APRs |
Spending guardrails from a limit tied to your deposit | Deposit at risk if you miss payments |
When should you get a secured credit card?
A secured credit card can help build positive credit history, which may positively impact your credit score. FICO® says 90% of top lenders use FICO® Scores. Here's roughly how FICO® weighs the factors that affect your score, though the importance of each one can vary from person to person.
Factor | Percentage of FICO® Score |
|---|---|
Payment history | |
Amounts owed | 30% |
Length of credit history | 15% |
New credit | 10% |
Credit mix | 10% |
Payment history carries the most weight, so paying on time every month matters most. Making on-time payments can help build positive credit history and may positively impact your credit score. Late payment may negatively impact your score.
Keeping your credit usage low also shows lenders you can handle credit responsibly. Credit utilization is the share of your available credit you're using. Experian® suggests keeping it below 30% as a general guideline – and lower is better.
Consider setting up automatic payments from your checking account so you don't miss a due date. You can usually do this by giving the card company your account and routing numbers.
Balance alerts can help, too. Many issuers let you set up card alerts, such as when your balance crosses a threshold you choose. The alert tells you when you're getting close, so you can pause new charges.
You can also build credit without a credit card by taking out a personal or credit-builder loan. Becoming an authorized user – someone who can use another person's card – is another option. Not all issuers report authorized-user activity to the credit bureaus, and the impact on credit may vary.
Space out new credit applications, too. A credit application may result in a hard inquiry, which may temporarily lower your credit score. Experian® says a single hard inquiry typically takes fewer than five points off your score.
How to get a secured credit card
Getting a secured credit card is a straightforward process. Follow these steps:
Shop around: Compare fees, upgrade options, deposit amounts, and whether the card offers a grace period before interest applies.
Apply online or in person: Fill out the application with your personal information and submit it to the card issuer.
Make the deposit: Your issuer may let you pay your security deposit online, by phone, or by mail.
Receive your card: The issuer mails your card after it processes your deposit. Some financial institutions may also issue virtual cards.
Make on-time payments: Stay on top of your monthly payments, which can help build positive credit history and may positively impact your credit score.
What is Reddit® saying about secured credit cards?
Reddit users in communities like r/CRedit and r/explainlikeimfive often say secured credit cards can be a simple, safe way to build – or rebuild – credit.
One user summed it up clearly:
"The point is exactly what your stated goal is: to build (hopefully positive) credit history." – r/CRedit
Users also explain how secured cards work:
"A secured card simply has a limit that is equal or lower than your deposit, such that if you ever owe money, the company can use that deposit…" – r/explainlikeimfive
And they reinforce what really matters for improving your credit:
"Your credit is affected by several things. Making payments on time is the biggest. The next biggest chunk is credit utilization, so the more credit you have but are not using the more this part is impacted." – r/explainlikeimfive
Reddit's key advice: Secured cards turn good habits into strong credit
The thread echoes what our experts say, too. Secured credit cards can help you build healthy financial habits by using your own money as a foundation for responsible credit use.
Some Reddit users in these threads see secured cards as a practical tool for building credit the right way.
Build your credit one payment at a time
A secured card can help you build credit by turning consistent habits into positive credit history. Start with a small, predictable charge, like a streaming subscription, and pay it off on time each month.
The Consumer Financial Protection Bureau says paying your balance in full by the due date can help you avoid interest on new purchases. That holds if your card has a grace period and you aren't carrying a balance.
On-time payments and a longer account age may strengthen your credit profile over time. Some issuers may also move you to an unsecured card and return your deposit.
Compare your options to find a card that fits your spending style and goals. The Chime Visa® Credit Card (see disclosure 1) is a secured credit card that can help you build credit history when you make on-time payments. (see disclosure 2)