Secured Credit Card V/s Prepaid Debit Card: Which is Better?

Tanmay Punyarthi

Table of Contents

Consider a secured credit card or prepaid card if your credit history is failing and you're seeking a credit card solution. Both are advised for those with bad or new credit, but which is best for you? Whether you need to establish credit or are only making electronic payments will determine the answer.

Prepaid and secured credit cards demand deposits before you can make transactions. You can use both at most locations where credit cards are accepted, such as grocery stores, gas stations, etc. So let’s know about the fundamentals of secured credit card vs prepaid cards so that you can make an informed decision.

What is a Secured Credit Card?

You must make a security deposit against the credit limit to get a secured credit card. Your security deposit is retained in a savings or certificate of deposit (CD) account until your credit card is changed to unsecured credit.

The application procedure for a secured credit card is identical to that for an unsecured credit card. Even while many card issuers still run a credit check, you have a better chance of getting approved if your credit history is less than ideal. As with a conventional credit card, you borrow money when you use a secured credit card.

READ MORE: About secured credit cards

What is a Prepaid Debit Card?

You can use prepaid cards to spend on purchases, but something different happens behind the scenes. Even though these cards are occasionally referred to as "prepaid credit cards," they aren't credit cards. Prepaid cards are more like debit cards linked to a checking account than credit cards.

A prepaid card has no credit limit. Your deposit will be added to an account and used as the source of funds for your transactions. Instead of paying from the borrowing money of a credit card company when you make a transaction using your prepaid card, your card balance is used instead. You cannot spend more until you have replenished your deposit, so you must do so.

MUST READ: Difference between secured and unsecured credit cards

Secured Credit Card V/s Prepaid Debit Card

Here is the quick read table for Prepaid v/s secured credit card:


Prepaid Debit Card

Secured Credit Card

Purchases are made from

funds deposited onto the card

a secured credit line

Does it generate Credit Reports?



Recommended for

learning how to budget

building credit

Required minimum age 



Authorized User Age

No minimum bar, but it depends on the card issuer

No minimum bar, but it depends on the card issuer


can be high


Secured Credit Card V/s Prepaid Debit Card: Which One You Should Choose?

Get a prepaid card if you're looking for a way to spend money.

Prepaid debit cards might be a lifesaver as a payment method or budgeting tool, but they don't help you develop credit. Would you like to impose a strict cap on your discretionary spending? Put a certain amount of money on a prepaid card each month, and when it runs out, stop using it. Many parents deposit money onto prepaid cards for their children who are college students or teenagers. Additionally, for those who lack a checking account or access to conventional banking services, prepaid cards are a safer option than cash.

Get a secured card if you want to improve your credit.

Secured credit cards don't increase your "spending power" because you have to deposit cash equal to your total credit limit. To validate that you can manage credit responsibly  — that you can borrow money and repay it and can have access to a line of credit without using it all — is the idea of acquiring one. Your credit may improve if you do that.

MUST READ: Best secured credit cards to rebuild credit

Now, we can conclude if you cannot create a checking account due to a poor financial history or want to avoid banks, a prepaid card is the best choice. Numerous workplaces provide the option of directly depositing your pay onto prepaid cards, and some of these cards even permit you to mail a few checks per month or sign up for online bill payment. Secured credit cards are the best option to raise your credit score. Choose a secured credit card that sends credit information to all three main credit bureaus. Some best-secured credit cards like Azpire offer the same benefits as other secured credit cards but without any changes and zero annual interest rate. So between prepaid vs secured credit cards, choose as per your needs.


Denied for secured credit card?

Partially secured credit cards

Frequently Asked Questions (FAQs)

1. What drawbacks do prepaid debit cards have?

Ans. Prepaid cards can be pricey because the card issuer has a lot of discretion over the activation fees. Some organizations charge fees for each card used and the activation fee. When you use an ATM check your balance; additional costs (if applicable).

2. What is the difference between prepaid v/s secured credit cards?

Ans. When using a secured credit card, you use borrowed funds from the credit card provider. After the purchase, you return that cash. You spend your own money when using prepaid debit cards. Before making a transaction, you load money onto the card.

3. Does a secured credit card operate similarly to a regular credit card?

Ans. Nearly the same as an unsecured credit card, a secured credit card requires a minimum deposit (known as a security deposit) before you may acquire a credit limit. Generally, the deposit is $200, though it could be greater or lower depending on the secured card you choose. Some secured credit cards like Azpire credit builder cards do not require a minimum deposit, and you should always opt for a card with no minimum deposit.

4. Do Secured Cards Speed Up Credit Building?

Ans. Although it's not a one-size-fits-all approach, using a secured card can be a successful way to build a solid credit history. Using a secured credit card can boost some customers' credit within six months of opening the account; for others, a more noticeable improvement may take much longer.

5. Can I be denied a secured credit card?

Ans. You may be refused a secured card if you have significantly insufficient entries on your credit reports, such as active or recently discharged bankruptcy, collection accounts, or repossessions. The issuer can reject if you don't fulfill the issuer's minimal conditions for approval.