Secured Vs Unsecured Credit Cards: Which Should You Get First

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

When it comes to building credit or rebuilding credit after a late payment, debt consolidation, or purchasing a house, choosing the right secured versus unsecured credit card is crucial. While both types of cards can be useful, they differ significantly in terms of their interest rates, fees, and benefits.

**Unsecured Credit Cards: The High-Risk Alternative**

Unsecured credit cards require a legitimate credit history to obtain approval. If you have no credit or low credit, applying for an unsecured card can lead to denial. Additionally, the APR on these cards is typically higher than secured cards, ranging from 14.99% to 24.99%. For example, a Chase Freedom Unlimited with an APR of 22.49% and a $0 annual fee.

**Secured Credit Cards: A Safe Haven for Building Credit**

Secured credit cards require a security deposit, which becomes your credit limit when you make on-time payments. This type of card is ideal for those with poor or no credit history. Secured cards offer lower APRs, ranging from 10% to 20%, compared to unsecured cards.

**Real-Life Examples: Secured vs Unsecured Cards**

Let’s consider two scenarios:

Scenario 1: John, a recent college graduate, wants to buy a car but lacks good credit. He applies for an unsecured card with an APR of 19.99%. After making payments on time, the APR drops to 14.99%, allowing him to purchase the car.

Scenario 2: Sarah, who has no credit history, applies for a secured card with a $500 security deposit and an APR of 12%. She makes all payments on time, and after one year, her credit score improves significantly.

**APR Figures**

Here’s a summary of APR figures for some popular secured and unsecured credit cards:

* Secured Credit Cards:
+ Chase Freedom Plus: 11.99% – 21.99%
+ Discover it Secured: 12.49% – 23.49%
+ Capital One Secured Mastercard: 10.49% – 22.49%
* Unsecured Credit Cards:
+ Wells Fargo Cash Wise Visa Card: 14.99% – 24.99%
+ American Express Blue Cash Preferred: 12.99% – 22.99%
+ Citi