Secured vs. unsecured business credit cards

A secured credit card requires a refundable cash deposit as collateral, while an unsecured credit card doesn’t. Both let you borrow against a credit limit and repay balances over time, but they differ in how you qualify, how much you can spend, and what it costs to get started.

At a high level, secured cards are easier to get because the deposit reduces issuer risk, while unsecured cards rely on your credit history and income and typically offer higher limits and better rewards.

What is a secured credit card?

A secured credit card is a credit card backed by a cash security deposit. You provide the deposit when you open the account, and the issuer holds it as collateral in case you stop making payments.

Your deposit sits in a separate account while you use the card for everyday purchases. If you pay your bill on time and follow the card’s terms, the deposit remains untouched. If you miss payments or close the account with a balance, the issuer can apply the deposit to what you owe.

In most cases, your credit limit equals your deposit. For example, a $300 deposit usually gives you a $300 limit. Some issuers allow larger deposits for higher limits, but the basic structure is the same.

How secured credit cards work

From a day-to-day perspective, secured cards work like traditional credit cards. You can use them for purchases, receive a monthly statement, and choose to pay the balance in full or carry it forward with interest.

Applying for a secured card usually involves a few straightforward steps:

• You submit an application with basic personal or business information
• The issuer approves you largely based on your ability to fund the deposit
• You provide a refundable deposit, often between $200 and $500

Once the account is open, payments and interest work the same way as unsecured cards. If you carry a balance, the card’s interest accrues based on the card’s annual percentage rate (APR). Paying in full each month avoids interest entirely.

When you close the account in good standing, the issuer refunds your deposit, typically within one or two billing cycles. If you’re upgraded to an unsecured card through the issuer’s graduation process, the deposit is often returned automatically.

Who should consider a secured credit card

Secured cards are designed to lower the barrier to entry. They’re often used by people who want the convenience of a credit card but don’t yet meet the approval standards for unsecured options.

They can be a good fit if you’re:

• Building credit from scratch and need a tradeline reported to credit bureaus
• Recovering from bankruptcy or poor credit and don’t qualify for unsecured cards yet
• A young adult or student with limited or no credit history
• A recent immigrant establishing U.S. credit for the first time

What is an unsecured credit card?

An unsecured credit card is a traditional credit card that doesn’t require a security deposit. Issuers determine your credit limit based on your creditworthiness rather than collateral.

Because there’s no deposit backing the account, issuers rely on your credit score, income, and repayment history to assess risk. Stronger credit profiles generally qualify for higher limits and lower interest rates.

Unsecured cards also come in a much wider variety than secured cards. You’ll find options with cashback, travel rewards, sign-up bonuses, and other perks that are rarely available on secured cards.

How unsecured credit cards work

Approval for unsecured cards depends heavily on your credit profile. Issuers review your credit report to decide whether to approve your application and what terms to offer.

Your credit limit is set based on factors like income, existing debt, and past repayment behavior. Over time, consistent on-time payments can lead to automatic or requested credit limit increases.

Many unsecured cards include features such as:

• Cash back or points on eligible purchases
• Introductory offers
• Travel or purchase protections

Who qualifies for unsecured credit cards

Most unsecured cards require a minimum level of creditworthiness. While standards vary by issuer and card type, common considerations include:

• A credit score of around 670 or higher for mainstream unsecured cards
• Income verification to confirm you can manage monthly payments
• A credit history that shows consistent on-time payments

Secured and unsecured credit cards: Key differences

Secured and unsecured credit cards both let you borrow, repay, and build credit, but they approach risk and accessibility very differently. Secured cards prioritize access and credit building, while unsecured cards emphasize flexibility, higher limits, and rewards.

Those differences show up most clearly in deposit requirements, credit limits, qualification standards, and overall cost.

Security deposit requirements

Secured cards require a refundable cash deposit, often in the $200 to $500 range. In most cases, that deposit becomes your credit limit. While the upfront cost can be a hurdle, it also makes approval possible with little or no credit history.

Unsecured cards don’t require a deposit. That reduces the initial cash outlay, but issuers offset that risk by applying stricter approval standards.

Credit limits

Credit limits follow different logic depending on the card type. With secured cards, the limit usually matches the deposit amount, which creates a predictable ceiling on spending and utilization. With unsecured cards, issuers base credit limits on your credit score, income, and existing debt. Limits can increase over time as your credit profile improves.

Qualification requirements

Credit score is the main differentiator in approval standards. Secured cards are available to applicants with any credit score, including those with no score at all. Unsecured cards typically require a minimum score of around 670, with better terms offered to stronger profiles.

Income verification also differs. Secured card approval is primarily tied to your ability to fund the deposit, while unsecured card issuers rely more heavily on income and cash flow to assess repayment ability.

Credit history length matters more for unsecured cards. Longer, positive histories improve approval odds and limit sizes, while secured cards place far less emphasis on prior history.

Interest rates and fees

APR and fees vary by issuer, but some broad patterns apply. Secured cards often carry higher APRs, commonly in the 22% to 28% range. Unsecured cards generally offer lower APRs, often between 15% and 25%, depending on credit tier.

Both card types may charge fees such as:

• Annual fees
• Late payment fees
• Foreign transaction fees

Benefits and drawbacks

Neither card type is universally better. Each serves a different purpose depending on where you are in your credit journey and what kind of access you need right now.

Secured credit card pros and cons

Secured cards offer accessibility and a clear path to building credit, but they come with trade-offs.

Pros:

• Easier approval: The deposit reduces issuer risk, making secured cards accessible to people with limited or damaged credit
• Credit-building opportunity: On-time payments are reported to credit bureaus and can improve your credit profile over time
• Upgrade potential: Some issuers allow you to transition to an unsecured card and refund the deposit after consistent responsible use

Cons:

• Upfront costs: The required deposit ties up cash you could use elsewhere
• Lower credit limits: Smaller limits make it harder to keep credit utilization low
• Limited benefits: Secured cards typically offer fewer rewards and perks than unsecured options

Unsecured credit card pros and cons

Unsecured cards provide more flexibility and value, but they’re harder to qualify for.

Pros:

• No security deposit: You don’t need to put cash down to open the account
• Higher credit limits: Larger limits support bigger purchases and help keep utilization lower
• More perks: You’ll have access to stronger rewards programs and additional card benefits

Cons:

• Stricter approval standards: Many applicants won’t qualify without established credit
• Risk of debt: Higher limits can lead to overspending if balances aren’t managed carefully
• Heavier consequences: Missed payments can trigger penalty APRs, added fees, and sharper credit score declines

How both card types affect your credit score

From a credit scoring perspective, secured and unsecured credit cards are treated the same. Both report account activity to major credit bureaus, and both can help or hurt your credit depending on how you use them.

Payment history carries the most weight. Making on-time payments consistently helps your credit score regardless of card type, while late or missed payments damage it.

Credit utilization also plays a major role. Keeping balances low relative to your available credit signals responsible borrowing. That means:

• Avoiding maxed-out cards
• Paying balances down before statements close
• Keeping utilization ideally below 30% of your limit

Many secured cards offer a graduation or upgrade path. After six to 12 months of on-time payments, issuers may convert your account to an unsecured card and return your deposit.

Building credit with either card type

Good habits matter more than the card itself. Paying every bill on time, keeping utilization low, and monitoring your credit reports for errors all contribute to steady improvement.

Most users see measurable progress within six to 12 months. Once you qualify for better terms, upgrading from a secured card to an unsecured card is often the next logical step.

Secured vs. unsecured business credit cards: What’s the difference?

Business credit cards follow the same core principles as personal cards, but they’re designed specifically for business spending, employee cards, and expense tracking.

A secured business credit card typically requires a business cash deposit as collateral. These cards are often used by new businesses or startups without established credit, since approval is less dependent on past credit history. Basic features usually include expense categorization and simple reporting tools.

Unsecured business credit cards don’t require a deposit, but they come with higher qualification standards. Issuers evaluate the business’s financial profile, the owner’s personal credit, or both. In return, unsecured business cards usually offer higher limits, better rewards, and more advanced spend management features.

Business credit cards may report activity to business credit bureaus, personal credit bureaus, or both, depending on the issuer. That reporting structure affects how quickly your business builds its own credit profile versus relying on the owner’s personal credit.

Best options for startups and new businesses

Startups often begin with secured business credit cards to establish a credit foundation. Consistent use and on-time payments help build a track record that lenders can evaluate.

As the business grows and credit improves, transitioning to unsecured business credit cards unlocks higher limits, better rewards, and more flexibility to support day-to-day operations.

Discover Ramp's corporate card for modern finance

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How to choose between secured and unsecured

Choosing the right card starts with an honest assessment of your current situation. The better option depends on your access to credit, available cash, and how quickly you need higher limits or rewards.

Ask yourself:

• Do you have cash available for a refundable deposit?
• What does your credit history look like right now?
• How soon do you need higher limits or better rewards?

If your credit is limited or damaged, a secured card can provide a clear path forward by helping you build credit with lower approval risk. If your credit profile is already strong, an unsecured card usually delivers better long-term value.

It’s also worth considering timing. Secured cards may require more upfront cash, but they can unlock access to unsecured cards later. Unsecured cards reduce upfront cost but require stronger qualifications from the start.

Try Ramp’s unsecured business credit card

Ramp offers an unsecured corporate card designed for businesses that want flexibility without putting down a security deposit.

Instead of relying solely on traditional credit scores, Ramp often evaluates factors like business revenue, transaction history, and customer base. That approach can make it easier for businesses with limited credit history to qualify compared to traditional unsecured business cards.

Ramp’s corporate card also includes features that support day-to-day financial operations, such as cash back rewards, expense management tools, automated bill payments, and early payment discounts.

Ramp may be a good fit if:

• You have limited credit history but steady business revenue
• You operate an e-commerce or online-first business
• You want an unsecured card paired with built-in spend controls and reporting

Assess your options and determine whether Ramp’s unsecured business credit card aligns with your next stage of growth.