While both prepaid/debit cards and secured cards require a deposit before you can make purchases, there are many differences between them:

Debit and Prepaid Cards

  • Reflect the amount of money you have in the bank account linked to it.

  • Don't require monthly payments and don't have interest rates.

  • Do not report to the credit bureaus, impact your credit score, or help you build credit.

Secured credit cards

  • The security deposit is only used if you don't pay your monthly credit card bill and any outstanding fees. Then the security deposit typically covers what you owe.

  • You must pay at least the minimum balance due each month, on or before the due date.

  • If you fail to pay off the entire statement balance on or before the due date, you get charged interest. That's why each secured card has a standard interest rate.

  • Each month, your payment history and amounts owed on the card are typically reported to the three major credit bureaus. These cards will impact your credit score and appear on your credit report.

  • When managed responsibly, a secured card helps you build credit.