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Comparison of Prepaid Card and Secured Credit Card

If you are in need of a credit card solution and suffering from credit history, then you need to know the difference between prepaid cards and secured credit cards to make a decision. There are primarily two types of cards, namely prepaid cards and secured credit card. Hence, if you are looking to get hold of any of these cards, you need to be aware of the differences.

So, how are the similar?

Both the prepaid cards and secured credit cards need a similar thing and that is they need to deposit money prior to using them. Both of these cards can be put to use in similar places such as gas pumps, grocery stores and many more. However, these are the only similarities between the both of them.

What are their differences?

A secured credit card needs you to make some security deposit in favor of the set limit of credit, prior to the approval of your card. After this your security deposit is placed inĀ  a CD or certificate or deposit or saving account, till the time you default on your credit card and your card is converted to an unsecured one.

Your revolving credit limit goes against the purchases made with the secured credit card. However, your credit limit goes up again after you have paid off your balance credit; this is similar to your normal credit cards. While applying for a secured card, you are more risky borrower and hence a security deposit is mandatory.

On the other hand, prepaid card are very different in comparison to the secured credit cards. They are not credit cards even if they are called prepaid credit card. A prepaid card is free of any limits. It works in a very simple manner, and that is, when you make any deposit in your card, it is automatically saved in an account. So, every time you swipe the card, the balance is deducted from this account. In addition, before you can spend again, you will have to redeposit a money onto your card.


The secured credit card has its usual fees such as late fee, finance charge, annual fee and application fee. If you make use of your credit card responsibly, you can easily avoid some of the charges, whereas some are mandatory. Depending on the usage of cards and in case if you lose it, the prepaid cards fees may differ. The monthly maintenance fees and activation fees are deducted for the initial time after opening your account. Every time you reload money in the card, you may or may not have to pay a fee. Some banks avail these cards for the fee of charges. These prepaid cards are also free of late fees or interest charges.

Which one do you need?

A secured credit card is your best choice if you wish to improve your credit scores. On the other hand, prepaid cards are your best option if you want to avoid banks and cannot get a checking account. Some prepaid cards can allow you to enroll in online bill payment or send few checks on a monthly basis. It as well allows employers to make a direct payment of your salary into your prepaid cards on request.