Secured Vs Unsecured Credit Cards: Which Should You Get First

**Secured vs Unsecured Credit Cards: Choosing the Right One for Your Financial Future**

When it comes to building or rebuilding credit, choosing the right type of credit card can be a daunting task. Two popular options are secured credit cards and unsecured credit cards, each with its pros and cons. In this article, we’ll break down the differences between these two types of credit cards, discuss specific financial details, APR figures, and actionable advice to help you make an informed decision.

**Secured Credit Cards**

A secured credit card is a type of credit card that requires a security deposit, which becomes your credit limit. To open a secured credit card, you’ll need to provide proof of identity, income, and employment. The security deposit acts as collateral, so if you default on payments or fail to pay, the lender can seize the deposited funds.

Pros:

* No credit check is required, making it easier to get approved
* Can help establish or rebuild credit
* Lower APRs compared to unsecured cards (typically 10-15% APY)
* May have fewer fees and stricter terms

Cons:

* Security deposit may be forfeited if you default on payments
* Higher interest rates may apply, especially for cash advances
* Limited credit available, which can impact your overall credit score

Example: If you put down $500 as a security deposit on a secured American Express Green Card with an 11.99% APR, you’ll have a credit limit of $1,000.

**Unsecured Credit Cards**

An unsecured credit card is a type of credit card that doesn’t require a security deposit. To apply for an unsecured credit card, you’ll need to provide personal and financial information. Unsecured cards typically offer higher credit limits and APRs compared to secured cards.

Pros:

* No security deposit required
* May have more credit available for those with lower credit scores
* Lower interest rates (typically 15-20% APY)
* Fewer fees

Cons:

* Credit check is required, which may impact your credit score
* Higher APRs may apply, especially for cash advances or purchases
* May have stricter terms and conditions

Example: If you apply for a Chase Freedom Unlimited with no annual fee, you’ll have an unsecured credit limit of $3,000.

**Actionable Advice**

When choosing between secured and unsecured credit cards, consider the following:

* If you’re new to credit or rebuilding your credit