In fact, when choosing your credit card, you may be faced with the “secured vs. unsecured credit card” debate. Of course, this comparison can be more complex than it seems.

That’s why we made an article to compare these credit products. This way, you will know which of these is the best option based on your current situation.

In everyday life, the difference between secured and unsecured cards is practically invisible. With both, you can buy online or in physical stores.

Also, you can use them to make transfers through mobile apps or ATMs.

At the end of each cycle, you must settle the balances and respect the credit limits offered. Also, both reporting to major credit bureaus will be part of your credit history.

However, the main difference between these types of cards lies in the type of customers they were created for.

Indeed, when offering credit services (loans or cards, for example), a bank risks not getting its money back.

These institutions have created strict processes to assess risks and define whether or not it is worth admitting a particular client.

One of the main criteria used to assess the quality of a customer is the credit score.

In fact, a “thermometer” measures the risk of default. If your score is high, your risk is low. If the score is low, the risk of default is considerable.

So banks created secured cards to reduce risk to attract customers with low credit scores.

The risk is mitigated through a secured deposit. This is an amount paid by the customer to the bank.

This deposit is in the care of the bank and can be used to settle balances if the customer does not pay his debts on time. In turn, unsecured cards do not require the same type of deposit.

After all, they were designed for customers with a higher credit score, indicating a lower default risk. Indeed, this is the real difference in the “secured vs. unsecured credit card” dispute.

Indeed, secured credit cards were/are the first choice of many people. Below, learn about the main advantages and disadvantages of this type of card:

For most of these cards, you must be over 18 and live in the United States. Approval is usually instant and with no credit check.

In addition, you must buy that you have at least enough income to pay card balances.

For this, you must prove income and expenses from loans or mortgages. Upon request or after this step, you must make a security deposit of at least $200.

In turn, unsecured credit cards tend to do better in vs. secure. However, you need to know the downside of having one of these in your wallet. See the list below to learn more:

In fact, the eligibility criteria for having an unsecured card tend to vary greatly from card to card. However, generally, you will need to prove income and debt level.

You must also present a document stating your nationality and address. Virtually all cards of this type will do a credit check to decide whether or not to issue you a card.

So, your credit history and credit score will heavily influence the final decision.

As you can see, in overall comparison, unsecured cards are significantly better than secured cards.

However, comparisons of this type are not enough to conclude which is best for you.

Below are three situations in which you should consider applying for a secured card:

However, if you don’t identify with these situations, perhaps an unsecured card is the best choice. After all, you can access benefits and even rewards programs more easily.

This blog has specific articles that can make you understand more about the world of cards in a light and simple way.

To expand your knowledge about these credit products, see the following post!