Back to Blog

Secured Cards vs. Credit Cards

What You Need to Know

When researching credit cards, international students often confuse the various options; the differences are often baffling to Americans as well. First we must distinguish between a proper credit card and a bank or debit card. While you can use the latter to make purchases, these are withdrawn from your bank account. Using a debit card is about the same as paying with cash and does NOT help build your credit. The two major choices for someone seeking their first proper credit card are a secured card and a standard credit card. What is a secured card and why does it sound safer? The answer is simple but unfortunately, it’s not about YOUR security.

Secured Cards Take Your Money

Credit card companies developed the secured card mostly as an alternative for Americans who have ruined their credit through irresponsible use of a standard credit card. After years of debt, their credit scores fell to extremely low levels, leaving them unable to buy a home, receive loans, or access any of the privileges Americans with good credit enjoy.

These poor souls have only one choice to rebuild their credit: pay a deposit equal to their credit limit to a credit card company who will then issue them a secured credit card. So the “secured” part refers to the bank or credit card company issuing the card. The card carrier pays thousands of dollars for the privilege of using a credit card again. Additionally, they pay higher than usual APRs and annual fees. Why? Because having good credit in the US is that important for financial independence.

Real Credit Cards Are Built On Trust

The standard credit card that financially responsible Americans enjoy is another thing entirely. These tend to start with $1000 credit limits, APRs below 20%, and no annual fees. These credit cards are not designed to create debt. They offer access to financial resources based on trust, allowing you to prove that trust through being financially responsible. Your reward is good credit, cash back on purchases, and a road to financial independence.

You Have a Choice

Many international students opt to sign up for secured cards because they believe they have no choice. Because the American financial system treats students without a social security number or work status as equal to Americans with bad credit histories. It’s easier to pay cash for a secured card or accept a credit card with predatory rates than to seek out real credit cards that are competitive with those offered to Americans.

But if you’re a financially responsible international student with a bright future ahead of you, there is a choice. There’s other ways to get access to real international student credit cards that will help you build your future. Your education status, the reputation of your school, your field of study, and other sources of income, can all show that you deserve a real credit card.