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In Australia, all credit cards are unsecured lines of credit. However, secured credit cards are common in the United States. This guide explains the differences between secured and unsecured credit cards as well as options available if you have bad credit.
Secured credit cards are designed for people with bad credit. These credit cards require a deposit and are used to help build your credit history. The approved credit limits are determined by the cash security you can put down when you apply. This money sits in an account for a period of time and the funds do not earn interest.
You must make regular repayments and you will accrue interest on any unpaid balances. There is an interest-free period if you pay your account in full each statement period. Using the card to withdraw money from an ATM will incur interest charges immediately. As mentioned earlier, these cards aren't available on the Australian market.
Your cash deposit is held by a bank or financial institution which allows you to get a secured credit card. These are the features you can usually expect from a secured credit card:
Just out of interest or if secured credit cards ever do enter the Australian market, here are some of the features that set it apart from a debit card:
You can compare the differences between these two lines of credit below:
Secured credit card | Line of credit home loan | |
---|---|---|
Security | Cash deposit | Property mortgage |
Credit limit | Set by cash security | Up to a % LVR |
Eligibility | Bad credit | Good credit |
Availability | Not available in Australia | Available in Australia |
Secured credit cards are usually suited to 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.
Fees apply if you don't make your credit card repayments by the due date. Late payment fees can be as high as $35, so be sure to pay by the due date on the statement. You can try changing your repayment frequency or set up an automatic direct debit to ensure you pay your account on time.
As secured credit cards aren't available in Australia, you can compare other credit card options on Finder.
Compare a range of bad credit loans here
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.
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.
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 are not an option in Australia. Credit cards are unsecured lines of credit. If you have a negative listing on your credit file you won’t be able to apply for a credit card. Consider these options instead of a secured credit card.
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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
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
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.
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
I am in Australia and wanting to get a secured credit card, is it possible?
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
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????
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