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. Secured credit cards are common in the United States, where most major issuers offer them, but no Australian bank offers one here.

Where are secured credit cards available?

Secured credit cards are widely available in the United States and Canada, and to a lesser extent in the United Kingdom.

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.

Secured Credit Cards in Australia - Your options explained

You cannot get a secured credit card in Australia. All Australian credit cards are unsecured accounts.
Secured credit cards are found in the United States, Canada and other countries. They give people a way to build credit history with a small credit limit secured by a small cash deposit.
If you want to build credit or increase your chance of approval in Australia there are alternatives you can consider.

What is a secured credit card?

In Australia you get approved for a credit card with an agreed credit limit. That's the maximum amount you can borrow. You don't have to offer any asset or cash as a security deposit.

In the US and some other countries, people with low incomes or poor credit scores can get a secured credit card. Customers have to offer a small cash deposit or link to a savings account when they get the card.

A way to build credit

Secured credit cards only let you spend a limited amount. They often have higher rates and fees too. They are a way for customers to safely establish or improve their credit scores.

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. It's typically relatively low to start with (as low as $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

Low rate credit cards

If you want to improve your credit score, you could apply for a low rate credit card with a low credit limit.

Consider cards with minimum credit limits between $500 and $2,000 that could help you manage repayments. You do need to have good credit history and a regular income to get a credit card.

Spend a little on the card and always pay it off on time. Be sure to check your credit score and see if you have any missed or late payments you need to pay off too.

Secured personal 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. Taking out a personal loan will lower your credit score initially. But if you pay it off on time it will eventually help improve your credit score.

Short term loans

Also known as payday loans, short-term loans allow you to borrow amounts up to around $2,000. This is one of the easiest ways to get a small amount of credit, but it's the most expensive and risky.

Payday loans carry very high fees that may increase the risk of debt, which could hurt your credit score.

Frequently asked questions

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.
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.

Sources

Thank you for your feedback!

Written by

Sally McMullen

Journalist

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Sally McMullen is a journalist with five years of experience covering credit cards and consumer finance. As co-host of the Two Broke Chicks podcast and co-author of Rich In Life, Sally shares valuable money-saving tips and life lessons with her audience. Sally was a Credit Cards Editor at Finder from 2015 to 2020. See full bio

Co-written by

Richard Whitten

Senior Money Editor

Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 759 Finder guides across topics including:

Home loans
Credit cards
Personal finance
Money-saving tips

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8 Responses

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

Finder

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

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.

Finder

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

TanyaJanuary 6, 2016

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

Finder

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

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????

Finder

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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Secured credit cards don’t exist in Australia — here are some alternatives

Secured credit cards offer limited credit secured by a small cash deposit. They let you build credit history and don't exist in Australia.