Each card comes equipped with a secure PIN and comprehensive instructions, allowing you to use them at any ATM worldwide.
If you're looking to manage your money better or start building credit, you've probably come across both secured and prepaid credit cards. While they may seem similar at first glance—both require upfront money and help control spending—they serve very different purposes. In this post, we'll break down the key differences between secured and prepaid credit cards, their pros and cons, and how to choose the right one for your financial goals.
What Is a Secured Credit Card?
A secured credit card works like a traditional credit card but requires a refundable security deposit. This deposit acts as your credit limit and protects the lender in case you don’t repay your balance.
Reports to credit bureaus: Most secured cards report to all three major credit bureaus—Experian, Equifax, and TransUnion.
Builds or rebuilds credit: Great for people with no credit history or a low credit score.
Deposit is refundable: When you close the account in good standing or upgrade to an unsecured card, you get your deposit back.
👉 Example: If you deposit $300, your credit limit is $300.
What Is a Prepaid Credit Card?
A prepaid credit card is more like a debit card—you load money onto it and spend only what you put in. There’s no credit line, and it doesn’t report to credit bureaus.
No credit check needed
No risk of debt because you can’t spend more than the loaded amount
Does not build credit since it doesn’t involve borrowing or credit reporting
👉 Think of it as a digital wallet or budgeting tool.
Key Differences at a Glance
Feature Secured Credit Card Prepaid Credit Card
Requires a deposit ✅ Yes (refundable) ✅ Yes (to load funds)
Builds credit ✅ Yes ❌ No
Reports to credit bureaus ✅ Yes ❌ No
Credit check required 🚫 Often not required 🚫 Not required
Spending limit Set by your deposit Set by your loaded balance
Interest charges ✅ Possible if balance not paid ❌ None
When to Choose a Secured Credit Card
Choose a secured credit card if:
You want to build or rebuild credit
You plan to apply for loans or mortgages in the future
You can make on-time payments each month
You want to graduate to an unsecured card
When to Choose a Prepaid Credit Card
Choose a prepaid card if:
You don’t want to worry about debt or interest
You’re using it for travel, budgeting, or kids
You’re not focused on building credit right now
You want spending control without risk