Secured vs. Unsecured Credit Card: Which One Is Right for You?

Key takeaways

• A secured credit card requires a cash deposit as collateral, making it a solid starting point if you're new to credit or rebuilding it.
• An unsecured credit card doesn't require collateral and is issued based on your creditworthiness, credit history, and income.
• Both card types can help you build credit, but they serve different stages of your credit journey.
• Your credit score is one of the biggest factors in deciding which card fits you right now.

Choosing between a secured and unsecured credit card comes down to where you are in your credit journey right now. If you have limited or damaged credit history, a secured card gives you a manageable way in. If you've already built a track record, an unsecured card likely offers more flexibility and rewards.

What is a secured credit card?

A secured credit card requires a refundable cash deposit that acts as your collateral. That deposit usually sets your credit limit — put down $300, and you'll typically get a $300 line of credit. Deposit minimums and maximums vary by issuer, but limits can range up to $5,000.

This structure exists because approval for a traditional card gets harder with a limited credit history or a lower score. According to Experian, that generally means a FICO score below 580 or a VantageScore under 601. A secured card gives lenders a safety net, which makes approval more accessible.

Secured cards work well if you're new to credit, rebuilding after a financial setback, or simply don't have much history yet. Your deposit isn't a fee. You get it back when you close the account in good standing or upgrade to an unsecured card.

The Federal Trade Commission notes that paying off your balance in full each month and avoiding maxing out your card helps build a stronger credit history, since your activity gets reported to the three major credit bureaus: Experian, Equifax, and TransUnion.

Benefits of a secured credit card:

• Looks and functions like a traditional credit card
• Helps you build or rebuild credit
• Encourages responsible spending habits
• Your deposit is protected — if you default, the issuer can use it to cover your balance (up to the amount of the collateral) 

What is an unsecured credit card?

An unsecured credit card doesn't require any collateral to open. Instead, issuers base approval on your creditworthiness — your credit history, income, and ability to repay debt. This makes unsecured cards the most common type of credit card, and they're typically geared toward people who already have an established credit history.

Benefits of an unsecured credit card:

• No collateral required
• Helps you continue building credit
• Higher credit limits than most secured cards
• Balance transfers allowed
• Rewards potential, like cash back on purchases
• Some unsecured cards come with lower interest rates and fees compared to secured cards

Secured vs. Unsecured credit cards: Key differences

How to know which card is right for you

If you're not sure where you stand, start with your credit score. Checking your credit report regularly helps you see where you land and whether a secured or unsecured card makes more sense today. You can view your full credit report at AnnualCreditReport.com, and you can pull a fresh report from each bureau every week. 

Generally:

1. If you have limited or no credit history, a secured card gives you a practical starting point.
2. If you're rebuilding after missed payments or financial setbacks, a secured card can help you demonstrate responsible use over time.
3. If you already have an established credit history, an unsecured card likely offers better rewards, higher limits, and more flexibility.

This isn't a one-size-fits-all decision, and it's worth thinking through your own financial picture rather than assuming one card type is automatically "better." A banker can walk through your specific situation with you if you want a second opinion.

How to graduate from a secured to an unsecured card

Moving from a secured to an unsecured card is a meaningful milestone — it shows you've built a track record of responsible credit use. A few habits can help you get there:

1. Build your credit score. A stronger credit score is one of the signs that you're ready for an unsecured card, though issuers weigh multiple factors together when determining eligibility. Check your credit report regularly to catch errors and track your progress.
2. Pay on time, every time. Late payments can hurt your score and may trigger fees. Setting up automatic payments or reminders helps you stay consistent.
3. Pay more than the minimum. Paying your balance in full, or as close to it as possible, lowers your credit utilization ratio and helps you avoid interest charges.

How to apply for a credit card with Fifth Third Bank

Applying for a secured or unsecured credit card follows the same basic process. You'll need to provide your name, birth date, address, Social Security number or ITIN, employment information, and proof of income.

If you're applying for a secured card, you'll also need to pay your security deposit at the time of application, usually with a debit card or bank account.

Once you've gathered what you need, you can start your application online or schedule an appointment at your local Fifth Third branch.

Tip: If you don't have a bank account yet, take a look at Fifth Third’s checking accounts and savings accounts options.