Choosing your first credit card, or rebuilding credit after a rough patch, can feel overwhelming. Before risking a hard credit inquiry on a new credit card application, you might be wondering whether to apply for a secured credit card or an unsecured credit card. Secured and unsecured cards work differently, and picking the wrong one could slow down your progress instead of speeding it up.
Secured credit cards require a security deposit that both sets your credit limit and acts as collateral if you can’t repay your balance. That makes them a go-to choice for people who have limited or damaged credit. Unsecured credit cards don't require collateral and typically come with rewards, but they usually require an established credit history to qualify. Before you apply for a credit card, it helps to understand what sets these two options apart and which one best fits where you stand today.
How Secured Credit Cards Work
The “secured” part of a secured credit card refers to the security deposit you have to put down. From a personal finance standpoint, that cash deposit serves two purposes: it sets your credit limit and acts as collateral that the bank can collect if you don’t repay an outstanding balance. So, if you start with a $500 deposit, you’ll typically have a $500 credit limit to spend from. This setup reduces the risk lenders take on and lowers the credit score needed for approval.
These cards carry most of the same standard features as other cards, including fraud protection. Plus, they’re ideal for building or rebuilding credit with fewer approval hurdles. While they’re easier to get approved for, you’re still responsible for making on-time payments and using the card responsibly to improve your credit score.
In some cases, the bank or credit union may allow you to upgrade or “graduate” to an unsecured card after you’ve demonstrated responsible card usage over time. Once you’re ready to graduate to a regular credit card, you can close your secured card and get your deposit back. Keep in mind that fees or interest may apply, and terms vary by issuer, so check the details before you sign up.
How Unsecured Credit Cards Work
An unsecured credit card skips security deposits altogether. Instead, approval depends more on your credit history and income. With an unsecured card, issuers typically look for good to excellent credit before extending an approval. A higher credit requirement might seem like a downside at first, but these added benefits might be worth it.
-
Purchase rewards programs
-
Balance transfer options
-
Extra perks and features
Eligibility and interest rates still vary by issuer and by your own credit profile, so nothing here is guaranteed.
Secured vs. Unsecured Credit Cards: What's the Difference?
The differences between these two card types go beyond the security deposit. Interest rates, credit limits, and who qualifies can vary. To get a better idea of the differences between Pearl Hawaii’s secured cards and unsecured cards, take a look at this chart:
|
Feature |
Secured Credit Cards |
Unsecured Credit Cards |
|
Interest Rate |
Pearl Hawaii's Secured card carries a fixed APR as low as 18.00%. |
Pearl Hawaii offers both fixed and variable rates, ranging from 9.74% to 18.00% APR depending on the card. |
|
Credit Limit |
Set by your deposit, from $500 up to $10,000. |
Set by your credit profile, up to $20,000 or $30,000 depending on the card |
|
Fees |
No annual fees |
No annual fees |
|
Best For |
Members building or rebuilding credit |
Members with established credit who want rewards or a lower rate. |
When considering which card to choose, it’s important to consider what you need to use the card for and where your credit currently stands. For example, if you’d prefer a card that earns rewards on purchases and has additional perks, and your credit is stellar, then an unsecured card is likely the best fit. However, if you’re recovering from some credit challenges and need a way to pay for purchases while rebuilding your credit, then a secured card may be the better option.
How Do Secured Credit Cards Help You Build Credit?
Every time you make an on-time payment towards your secured card, your card issuer reports that activity to the credit bureaus. They also report the ratio of your balances to your credit limit — also known as your credit utilization ratio. Consistently making on-time payments and keeping a low credit utilization work in your favor over time.
However, your card issuer may also report any late or missed payments and high credit utilization, which work against you. To improve your credit score, maintain healthy credit habits with your secured card and avoid accumulating debt if you can’t pay it off quickly.
When Should You Apply for a Secured Card vs. an Unsecured Card?
One of the simplest ways to know when to apply for a secured versus an unsecured card is to check your credit score. Applying for a secured card makes sense if your credit history has any of these characteristics:
-
Poor to fair credit score
-
A thin credit file
-
No credit history at all
An unsecured card fits better once you have an established credit profile with good to excellent credit. If you already qualify for competitive rates and want to earn cash back or points on your everyday spending, an unsecured option like Pearl Hawaii's Cash Back Platinum or Rewards Platinum card may serve you better.
Your Next Step Toward Stronger Credit
Whether you're just starting out, rebuilding after setbacks, or ready to earn rewards on an unsecured card, Pearl Hawaii offers options built around where you are right now.
Take a look at where your credit stands today, then match that to the card built for it. If your credit needs work, a secured card gives you a clear way forward. If your credit is already strong, an unsecured card can put rewards and lower rates to work for you.
Live your aloha, anytime, anywhere — starting with the credit card that fits your life today.
Frequently Asked Questions
How much does a Pearl Hawaii Secured Credit Card cost?
Secured cards typically carry no annual fee, though you'll need to provide a refundable deposit, starting at $500. That becomes your credit limit.
Can you graduate from a secured card to an unsecured card?
Many members use a secured card as a stepping stone. As your credit score improves through consistent, responsible use, you may become eligible to move to an unsecured card and get your deposit back. Not every card issuer offers this path, so it's worth asking directly about graduation options before applying.
How long does it take to build credit with a secured card?
Many members see improvement within several months of consistent, on-time payments and low credit utilization, though your timeline depends on your starting credit profile and overall payment history.
Is a secured card riskier than an unsecured card?
A secured card is actually lower risk since your deposit determines what you can spend. The main risk is losing your deposit if you default on payments.
