Secured vs. Student Credit Card: What’s the Difference?

Student and secured credit cards give you the ability to build your credit history. However, while one requires a security deposit, the other does not.

The primary difference between secured and student credit cards is that while you need to provide a security deposit to get the former, there is no such requirement for the latter. Both tend to come with more lenient eligibility requirements when compared to regular credit cards.

No matter whether you get a student or a secured credit card, you can build your credit history by using it in the right way. Selecting between the two typically boils down to whether or not you qualify for a student credit card.

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MoneyGeek’s Takeaways

theftSecurity

Secured credit cards require a security deposit, whereas student credit cards do not.

highschoolStudent

You need to provide proof of enrollment to apply for most student credit cards.

goodCredit

Both student and secured credit cards give you the means to build your credit history.

What’s the Difference Between a Student and a Secured Credit Card?

Student credit cards work in the same basic manner as regular credit cards do, requiring no form of collateral. Secured credit cards, on the other hand, require that you pay a security deposit. Secured cards usually have minimum and maximum security deposit amounts in place, and the amount you pay ends up functioning as your credit line. The corresponding table highlights key differences between student and secured credit cards.

Student Credit Cards
Secured Credit Cards

Credit Levels Accepted

Fair, limited, new to credit

Fair, limited, low, new to credit

Reports to Credit Bureaus

Yes

Yes

Made Available for

Students

Anyone over 18 years of age

Annual Fees

Most charge no annual fees

Most charge annual fees

Added Benefits

Most tend to offer cash back/rewards

Very few offer cash back/rewards

Student and secured credit cards come with their share of pros and cons.

Student Credit Cards

Pros

  • You don’t need to pay a deposit.
  • You stand to earn rewards/cash back.
  • Most come with no annual fees.

Cons

  • They are typically meant only for students.
  • Most require that you have some credit history.
  • They tend to come with lower credit limits than regular cards.
  • You’ll need to show you have enough income.
  • Students under 21 years of age require co-signers in the absence of adequate independent income.
Secured Credit Cards

Pros

  • Anyone over 18 years of age may apply.
  • Some secured cards accept high deposits and provide high credit lines.
  • You might qualify without any credit history.
  • You have the ability to control the credit limit.

Cons

  • You need to make a security deposit.
  • You need to make timely repayments to cover purchases despite the deposit.
  • Card issuers still look at your income and creditworthiness.
  • Most don’t offer rewards or cash back.
  • Most come with annual fees.

Is a Student Credit Card Secured?

Student credit cards are not secured, which means you don’t have to provide any security deposit. However, most student credit cards come with low credit limits. While the average credit card limit in the U.S. stood at $30,365 in 2020, most student cards for first-time cardholders with limited or no credit history come with initial credit limits of $500 to $1,500.

Some secured credit cards offer high credit limits, provided you are willing to pay a high security deposit. For example, the U.S. Bank Secured Visa Card lets you go as high as $5,000, and the BankAmericard Secured Credit Card comes with a maximum credit limit of $4,900. In case you’re looking for a secured credit card for business purposes, you might benefit by looking at what the Wells Fargo Business Secured Credit Card has to offer. It comes with a credit line of up to $25,000.

If your main aim is to build credit, you might benefit by getting a secured or a student credit card. This is because all good cards from both categories report your payment histories to the top credit bureaus. As long as you keep making your payments on time and keep your credit utilization ratio low, you can expect to see positive effects on your credit score.

Credit utilization ratio refers to the amount of credit you use from the total credit made available to you. For example, if you’ve borrowed $100 from your only card that has a $500 limit, your credit utilization ratio is 20%. It’s best to keep this number below 30%.

Should College Students Get Secured Credit Cards?

Since secured credit cards aren’t meant just for students, you may want to consider applying for one if you don’t qualify for a student credit card. While both cards are typically easier to qualify for than regular credit cards, you have more chances of approval with secured cards if you have little to no credit history.

If you’re unable to qualify for a student credit card because of poor creditworthiness, no credit history or not being enrolled in an eligible educational institution, consider applying for a secured credit card that requires a low security deposit and comes with no annual fees.

Once you build your credit, you may consider getting a regular credit card. Some card issuers evaluate you for an unsecured card after a given number of months. If this is not the case with your card provider, you may consider applying for a regular card by closing the secured card and getting your security deposit back.

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RANKING METHODOLOGY

If you qualify for a student credit card, it might work as a better alternative than a secured credit card. We’ve analyzed over 80 student credit cards by using our unique ranking methodology so you may select one with ease.

What Is the Point of a Student Credit Card?

Building credit history is among the most common reasons for getting a student credit card. This way, you may be able to get access to credit at competitive terms once you graduate or later in life. What’s important is that you use your student credit card in the right manner, failing which you might see a negative effect on your credit score.

Credit card companies understand that students tend to have limited or no credit histories. This is why most follow considerably relaxed eligibility criteria surrounding this aspect. Besides, card issuers know they stand to make money off cardholders, either now or in the future.

Student credit cards, like regular credit cards, give you access to funds up to a predetermined limit as and when needed. However, if you don’t pay off your balances in full each month and keep rolling them over from one billing cycle to the next, you might end up paying a tidy sum as interest charges. As a result, it’s best to pay off your balance in full each month.

Another advantage of getting a student credit card is that you get to capitalize on your everyday spending, given that a number of such cards offer rewards or cash back. Some even offer higher earn rates across specific categories. For example, the Capital One SavorOne Student Cash Rewards Credit Card offers up to 3% cash back on category-based spending, and you stand to earn up to 5% cash back on specific categories through the Discover it Student Cash Back Card.

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MONEYGEEK QUICK TIP

“When choosing a secured credit card, look for one that automatically increases your limit when you pay your account on time after a set number of months. Some also upgrade your card to unsecured as your credit history builds.” — Lee Huffman, credit card expert at BaldThoughts.com.

Other Questions You May Have About Student Credit Cards

Here are answers to other commonly asked questions about the student credit card vs. secured credit card comparison.

Next Steps

Now that you know where the secured credit card vs. student credit card comparison stands, consider getting the latter if you qualify for one. In case you don’t, you still get several secured alternatives from which to use. At the end of the day, both can help you build credit if you use them in the right manner.

Compare & Review Credit Cards

Experts at MoneyGeek monitor and analyze spending trends of American students based on data provided by the Bureau of Labor Statistics (BLS). They’ve looked at over 80 student cards and compared them across parameters such as fees, APRs and rewards so that you can select one that suits your specific requirements with ease.

Learn More About Student Credit Cards

The MoneyGeek editorial team stays up-to-date surrounding changes that take place in the credit card world. No matter whether you wish to learn about your rights as a credit card holder, how to build credit or the latest credit card offers, you may trust them to guide you in the right direction.

About the Author


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Rajiv Baniwal has been writing about different financial topics for over 15 years. Meticulous in his research, he makes sure he provides accurate and up-to-date information. His areas of expertise include mortgages, personal loans, credit cards, insurance and international money transfers.


*Rates or fees may vary or include specific stipulations. We recommend visiting the card issuer’s website for the most up-to-date information available.
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