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Secured Credit Cards

A secured credit card is designed for people with limited or bad credit history but they are not offered in Australia. Here’s what your options are.

Secured credit cards are common in the United States, Canada and other parts of the world. They give people a way to build or improve credit history by offering access to credit in exchange for a cash deposit or other security.

In Australia, all credit cards are unsecured accounts. But there are some alternatives you can consider if you want to build credit or increase your chance of approval.

What is a secured credit card?

Secured credit cards give people access to credit when they provide a cash deposit, linked savings account or other asset. This "security" helps reduce the risk for lenders and can help people build or improve their credit history.

Similar to other credit cards, you get a regular statement and need to pay at least the minimum amount. Interest charges also apply to any unpaid balance on the card. But if you missed a repayment or defaulted on a secured card, the lender could use part of the security to recover the debt.

Features of a secured credit card

  • Credit limit. A secured credit card is a line of credit from a bank. A cash deposit of your own money is typically used as a security. The financial institution then issues a credit limit based on the size of the deposit. It's typically relatively low to start with (e.g. $100 or $200).
  • Security. The security is held in an account by the credit card provider for a period of time (18 months for example). The security deposit does not earn interest.
  • Interest-free days. Get up to 25 days interest free on your card purchases when you pay back the card balance by the statement due date.
  • Interest charges. Interest charges apply on any balance you have not paid by the statement due date.
  • Credit tracking. The credit card provider will send reports to credit agencies about your repayment history.

Alternatives to secured credit cards in Australia

Depending on why you want the account, here are some options you could consider on the Australian market:

  • Secured loans
    A secured personal loan lets you borrow a set amount of money over a fixed term. Similar to a secured credit card, the loan's value is tied to an asset, such as a car, home or even savings you have in a term deposit account. This security means lenders may consider people with bad credit or casual employment.
  • Low-limit credit cards
    The secured credit cards that are offered overseas typically have low credit limits. In Australia, there are cards with minimum credit limits between $500 and $2,000 that could help you manage repayments. Just keep in mind that you typically need to have good credit history and a regular income to get a credit card.
  • No interest, flat fee credit cards
    These credit cards don't charge interest and have a flat monthly fee instead, similar to buy now pay later (BNPL). But unlike most BNPL accounts, these cards add to your credit report and can help build up credit history. So the account structure and relatively low credit limits offered on these cards make them another alternative to a secured card. They also have low credit limits.
  • Short-term loans
    Also known as payday loans, short-term loans allow you to borrow amounts up to around $2,500. They typically offer easier approval options for people with poor credit history compared to other types of credit. But they can also have very high fees that may increase the risk of debt (which could hurt your credit score).
  • Credit repair
    If your aim is to rebuild credit, a credit repair agency may be able to help by removing default listings from your credit file if there's been an error in the creditor's reporting process.
  • Tip: Finder's guide on bad credit and credit cards has more tips and insights if you're interested in a credit card for improving your credit score.

Finder survey: How satisfied are Australians with their experiences with personal loans?

Response
Somewhat satisfied49.31%
Neither satisfied nor dissatisfied27.08%
Somewhat dissatisfied9.72%
Very satisfied9.03%
Very dissatisfied4.86%
Source: Finder survey by Pure Profile of 1016 Australians, December 2023

How does a secured credit card compare to a secured home loan?

You can compare the differences between these two lines of credit below:

Secured credit card Line of credit home loan
Security Cash depositProperty mortgage
Credit limit Set by cash securityUp to a percentage of the loan-to-value ration (LVR)
Eligibility Bad creditGood credit
AvailabilityNot available in AustraliaAvailable in Australia

US secured credit card providers

  • Capital One Secured Mastercard
  • First Progress Platinum Elite Secured Mastercard
  • First Progress Platinum Prestige Secured Mastercard
  • USAA Secured Platinum Card
  • Citi Secured Mastercard
  • Wells Fargo Secured Visa Card
  • Bank of America Secured Credit Card
Tip: According to Finder research 2.7 million Australians have said they have made better financial decisions because they know their credit score. If you don't know yours, you can get your credit score and report for free through Finder.

Frequently asked questions

Who are secured credit cards suited to?

Secured credit cards are usually designed for cardholders who have bad credit and want to use a card to rebuild their credit history. Unfortunately, as they're not available in Australia at the time of writing, you'll need to consider other alternatives.

Why aren’t secured credit cards provided in Australia?

Due to the credit laws secured credit cards are not offered by Australian credit card providers.

Some Australian banks, such as ANZ Bank, offer secured credit cards via some of their US branches, in Guam and in Singapore but not within Australia.

Where are secured credit cards available?

Secured credit cards are available from several lenders and credit card providers across North America. To a much lesser extent, these types of accounts can also be found in Great Britain and Canada, but these are becoming rarer. Singapore and the Philippines also have a small selection of secured credit cards from a couple of providers.

How does a secured credit card differ from a secured debit card?

A secured credit card offers a line of credit that you can spend and repay over time, with a cash deposit or other security linked to the account. As a form of credit, it helps build your credit history and can affect your credit score.

In comparison, a debit card is linked to your transaction account and allows you to spend money you earn and save. As debit cards are not a form of credit, it's easy to apply and open an account even if you have a bad credit score or are bankrupt. It also doesn't affect your credit score.

Can secured credit cards be used for bankrupt people to rebuild their credit record?

The US uses a credit scoring system for banks and lenders to determine how responsible a customer is with their finances. It’s common for bankrupt people to apply for a secured credit card to help improve their credit history.

A secured credit card provider sends reports to credit reporting agencies about your repayment history. If you have a good repayment history, it will help improve your credit history.

More guides on Finder

  • Finder Credit Card Report 2024

    Finder's Credit Card Report investigates the emerging consumer behaviours and industry trends in Australia's credit card market.

  • Credit cards for pensioners

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  • Credit Card Surcharges

    Compare the surcharges that you can expect when you pay with a credit card and pick up tips to avoid these extra fees.

  • You deserve the best credit card

    While there isn't one best credit card, you can find a card that suits your needs by comparing the features, deals and offers that are trending here.

  • Horizon Bank Visa Credit Card

    This low-cost card offers the same interest rate for all transactions and a $0 annual fee for life.

  • How long does it take to get a credit card?

    From submitting the application and getting approval to receiving the card in the mail, here's how long it takes to get a new credit card.

  • Easy credit cards to get approval for

    When you apply for a credit card online, you could receive a response within 60 seconds. Find out how you to find a card that you're eligible for and increase your chances of approval.

  • Custom credit card options in Australia

    As well as credit card companies that let you choose your design, there are stickers and covers that you can get to customise your card.

  • Credit card vs debit card

    While a credit card is linked with a line of credit, a debit card is connected to your own money. Compare the differences between the card types in this guide.

  • No Foreign Transaction Fee Credit Cards

    Find out how you can keep your overseas spending costs down by comparing credit cards with no foreign transaction fees and no currency conversion fees.

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8 Responses

    Default Gravatar
    JoelFebruary 2, 2016

    I’m a father looking to build a credit rating for my young son as he shall soon start work. Is there anyway I can achieve this in Australia without a secured credit card or something of the like thanks

      AvatarFinder
      JonathanFebruary 3, 2016Finder

      Hi Joel, thanks for your inquiry!

      If your son is over 16 you may like to consider adding him as an additional cardholder to your own credit card if you are a primary cardholder. Otherwise if your son is over 18 he can consider applying for a credit card with a lower credit limit and minimum income requirement which will increase the chance of being approved. Other methods of building a credit rating include applying for services which require a monthly payment such as mobile services, broadband plans etc.

      I hope this helps.

      Cheers,

      Jonathan

    Default Gravatar
    AmiJanuary 15, 2016

    Hi, I’m in Australia. Is it possible for me to open an account in Singapore and apply for a secured credit card? I have the Singapore 10k required by HSBC. But there website is not clear on non-residents.

      AvatarFinder
      SallyJanuary 21, 2016Finder

      Hi Ami,

      Thanks for your question.

      As an Australian financial comparison service, we currently only compare credit cards available in Australia on the website. Without knowing which card you’re referring to, it’s difficult to provide you with any specific information. If you can’t find the information on their website, I would suggest getting in contact with their customer service team directly to follow up your enquiry.

      I’m sorry we couldn’t be of more assistance.

      Cheers,

      Sally

    Default Gravatar
    TanyaJanuary 6, 2016

    I am in Australia and wanting to get a secured credit card, is it possible?

      AvatarFinder
      SallyJanuary 6, 2016Finder

      Hi Tanya,

      Thanks for your question.

      Whilst there are no credit card providers in Australia that are currently offering secured credit cards, you can compare other credit cards. Simply choose which feature is important to you to show you a range of credit cards you can compare. If you are ready to apply, you can select the “Go to site” button of your preferred credit card to proceed with your application. You can also contact the provider if you have specific questions. A gentle reminder, please ensure to read through the relevant product disclosure statement and terms and conditions to ensure that you got everything covered before you apply.

      I hope this helps.

      Cheers,
      Sally

    Default Gravatar
    bradleyDecember 17, 2015

    i am an american citizen living in Japan. I am looking for a bank that will give me a secured credit card, and account, if needed, by using my japanese address. I do not have an address in the USA. Can anyone help me find a company that will let me open an account and get a secured credit card with a japanese only address????

      AvatarFinder
      SallyDecember 18, 2015Finder

      Hi Bradley,

      Thanks for your question.

      Just to confirm, you have come through to finder.com.au – an Australian financial comparison service.

      As such, we’re unable to provide you with information regarding financial options in Japan. Instead, you’ll need to compare your options and contact some Japan-based providers to discuss your options.

      I hope this has helped.

      Cheers,

      Sally

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