Guide to secured credit cards

Secured credit cards aren’t available in Australia, but this is how they work and some of the alternatives you can consider.


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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 looks at the differences between secured and unsecured credit cards as well as options available if you have bad credit.

What is a secured credit card?

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.

Features of a secured credit card

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:

  • Credit limit. Most secured credit card providers offer a credit limit that is equal to your security deposit.
  • 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.
  • Cash transactions. Using a secured credit card to withdraw money from an ATM will incur interest charges right away.
  • 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.

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

  • Credit limit attached. A secured credit card is a line of credit from a bank. A cash deposit of your own money is used as a security. The financial institution issues a credit limit based on the size of the deposit. You’ll need to repay what you spend in addition to any interest charges.
  • A debit card is linked to your transaction account. This is the account most people get their pay deposited into, use to make everyday purchases and ATM withdrawals. A secured credit card can be opened with a single cash deposit. You’re given a line of credit you can continue to use as long as you can make repayments. Debit cards and secured credit cards offer similar features at the checkout and online security features.
  • Repayments. You must make regular repayments when you spend using a secured credit card.
  • Bankruptcy option. You can apply for a debit card account if you’re bankrupt. However, some secured credit cards have an application requirement that you must not have been bankrupt in the past two years.
  • Credit score. A secured credit card provider will report your regular repayments to credit reporting agencies, which can help improve your credit score.

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 % LVR
Eligibility Bad creditGood credit
AvailabilityNot available in AustraliaAvailable in Australia

Who are secured credit cards best suited to?

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.

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

Penalty rates and late payment fees

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.

Pros and cons of using a secured credit card


  • Credit history. Secured credit card providers send reports to credit agencies about your repayment history. This can help improve your credit history and credit score.
  • Bad credit alternative. You can apply for a secured credit card if you have a bad credit history.
  • Interest-free days. You can get interest free days on your credit card purchases if you pay your balance in full by the statement due date.


  • Limited credit. Your credit limit is often limited to the amount of money you deposit.
  • Interest. Paying fees and interest on money you’ve deposited to the bank is unnecessary. Be sure to only spend what you can afford to repay within the interest free period.
  • Annual fee. These cards usually come with an annual fee, so it’s important to make sure the extra features offered with a secured credit card are enough to justify the annual fee.
  • Risk. You will lose your deposit if you fail to make the repayments on your balance amounts

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

Frequently asked questions

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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 Customer Care
      JonathanFebruary 3, 2016Staff

      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.



    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 Customer Care
      SallyJanuary 21, 2016Staff

      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.



    Default Gravatar
    tanyaJanuary 6, 2016

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

      Avatarfinder Customer Care
      SallyJanuary 6, 2016Staff

      Hi Tanya,

      Thanks for your question.

      Unfortunately, there aren’t any providers in Australia currently offering secured credit cards.

      You can compare other credit cards options here.

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



    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 Customer Care
      SallyDecember 18, 2015Staff

      Hi Bradley,

      Thanks for your question.

      Just to confirm, you have come through to – 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.



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