Secured Vs Unsecured Credit Cards: Which Should You Get First

**Secured vs Unsecured Credit Cards: Which One is Right for You?**

When it comes to building or rebuilding credit, choosing the right type of credit card can be overwhelming. Two popular options are secured credit cards and unsecured credit cards. In this article, we’ll break down the differences between these two types of credit cards, discuss financial details, APR figures, and provide actionable advice.

**Secured Credit Cards**

A secured credit card is a type of credit card that requires a security deposit, which becomes the initial credit limit on the card. This means you’re putting up some collateral to secure your debt, and you can only spend what’s available in your account balance. Secured cards are usually offered by banks and credit unions.

**Unsecured Credit Cards**

An unsecured credit card, on the other hand, offers a full credit limit without any security deposit required. These cards typically have higher interest rates than secured cards, as lenders view you as a higher risk due to your lack of a deposit.

**APR Figures:**

Here are some APR figures for popular secured and unsecured credit cards:

* Secured Mastercard from Capital One: 12.99% – 23.99% (Variable)
* Secured Visa Card from Discover: 13.49% – 22.49% (Variable)
* Unsecured American Express Blue Cash Preferred Card: 12.74% – 14.74% (Variable)

For example, if you have a secured Mastercard with an initial credit limit of $500 and a balance of $100, your APR would be 18% per annum.

**Financial Details:**

Secured cards often require a minimum deposit, which can range from $50 to $500 or more. This deposit serves as the credit limit on the card. If you miss payments or exceed your credit limit, you may face late fees and negative reporting on your credit score.

Unsecured cards, while offering higher credit limits, come with higher interest rates and fees. Additionally, lenders view unsecured cards as a higher risk, which can impact your credit score and make it harder to get approved for future credit.

**Real Examples:**

Let’s consider an example:

* John buys a new car worth $30,000 on a secured Mastercard with a $5,000 deposit. If he makes regular payments and doesn’t miss any due dates, his APR might be 20% per annum.
* Jane applies for an un