Secured Credit Card

Secured Credit Cards
December 4, 2023

Someone once asked me if a secured credit card was safer than a regular (unsecured) credit card and I thought, “great question!”

Both secured credit cards and unsecured credit cards are safe ways to make purchases without jeopardizing your personal funds and both offer fraud protection. BUT - a secured credit card requires a cash deposit up front that is not accessible to the cardholder but does provide the card issuer with security in case you don’t make your payments. With a secured credit card, the amount that you use for a deposit will become the credit limit on your card.

You’re probably thinking, “If I have enough money in the bank to use as a deposit, what do I need a credit card for?” Or, “Isn’t that defeating the purpose of credit if I’m basically using my own money?” More good questions! 

Well… a secured credit card is perfect for establishing or improving credit. For someone who doesn’t qualify for an unsecured credit card, secured is a great option. The interest rate can be significantly lower than an unsecured card which appeals to folks with good credit, too.

Another great reason to go the secured route when starting out is to practice using credit responsibly. After all, it is your money on the line – and a lower spending limit means less chance of getting into trouble with large high-interest balances that will be difficult to pay off.

As with any loan or credit card, making all of your payments in full and on time with a secured card will help your credit score improve. After a period of time, your score could reach a level where you can qualify for an unsecured card with a higher credit limit.

Oh – and the money that you deposit is fully refundable! You can get it back if the card balance is paid in full and you close the account or if you upgrade to an unsecured card.

At OFCU, our secured Visa credit card has an incredibly low interest rate of 4.9% APR and the minimum deposit is $500. Read this Banzai article about using credit responsibly or learn more about our credit card options and/or apply for one.