Advantages and Disadvantages of Secured Credit Cards

Secured credit cards are different from their regular counterparts in many ways. For one thing, you only need to maintain a certain amount of monetary investment in your secured credit card account in order to enjoy its benefits. And it’s also generally easier to apply for a secured credit card. However, it’s not without its downsides, too. So if you’re planning to apply for a secured credit card, best if you weigh the pros and cons first.


  1. Getting your secured credit card application approved is way easier than getting when you’re going for the traditional card.
  2. Account history of secured credit cards would also be recorded by credit bureaus in your credit report. This will make your account more secure.
  3. Secured credit cards can help you build or rebuild your credit score. Since any electronic payments you make through a secured credit card would be listed in your credit report, it will help you improve your financial standing. Plus, it can help build your credibility should you apply for regular credit cards.
  4. The capitalization you deposit in your secured credit card would remain virtually untouched. So unless you default on your payment, you can rest assured that the money you invested will stay where it is.
  5. Secured credit cards allow you to earn interest. Most secured credit card packages place your principal in an interest-bearing savings account, allowing it to gradually increase in value.


  1. You must not touch your security deposit at all costs. As mentioned above, your secured credit card account must maintain a certain balance for you to maximize its use.
  2. By shouldering the security deposits, you’ll also end up taking responsibility for any credit risks (which is something banks take care of for their traditional credit card holders).
  3. It’s also not that easy to secure the required minimum deposit. Most secured card programs need you to deposit at least Php 10,000.00, which is not exactly what you call a measly sum.
  4. Aside from the main deposit, a secured credit card comes with other fees as well. These include the application fee, a processing fee, and an annual fee, among others.
  5. And you need to shoulder a higher interest rate, too. Due to the high default risk that comes with secured credit cards, most programs involving them don’t have competitive interest rates.

It’s Up to You

Know the advantages and disadvantages of having a secured credit card first before applying for one. Better check out the lists above. That way, you’ll be able to make a better decision about it.