What’s the Difference Between Secured and Prepaid Cards?

Official blog of Refresh Financial

What’s the Difference Between a Secured Credit Card and a Prepaid Card?

What is a secured credit card?

A secured credit card - sometimes referred to as simply a secured card -  is just like a regular credit card in that your credit limit, balance and payment history is reported to Equifax and TransUnion and will impact your credit score. With a secured credit card, again, just like a regular credit card, you have a minimum monthly amount due, and as you pay off your card balance, your available credit goes up again.

The difference between a secured card and an unsecured credit card is that for the secured credit card, you put down a deposit, usually equal to the limit you want on the card.

Check out this post to find out more about the differences between a secured card and an unsecured credit card.

What is a prepaid card?

A prepaid card is loaded electronically with a certain amount of funds. You are then free to use the prepaid card like a regular credit card until the funds are gone. No monthly payments, no interest. When you make a purchase, the purchase amount is deducted from your card balance, much like a debit card – you’re not borrowing money from the card issuer as is the case with a secured credit card or regular credit card. Ultimately, because you are not being extended any credit, a prepaid card does not have any impact on your credit score. Why? Because there is no payment history to report – you are not building your reputation as a borrower – you’re just spending your own money.

What is the difference between a secured credit card and a prepaid card?

  • Credit Building

Both a secured card and a prepaid card are usually utilized by people with a low credit score who cannot yet access unsecured credit cards. The biggest difference is that if you have a secured credit card which you’re using on a regular basis and making at least the minimum payments each month (but more is always better), then you’ll be adding positive reporting to your credit history. Prepaid cards often carry the Visa or MasterCard logo (because these are the companies that process the payments), which can cause people to think they are just like a regular credit card, however, prepaid cards do not impact credit score at all.

Keep in mind, however, that if you are defaulting on other loans that you have, you will not see an increase in your credit score.  A good credit score is built by regular, on-time repayments of loans. All it takes is one loan that you’re defaulting on to undo all your hard work.

  • Fees

Both cards will come with some form of fees. For the secured card, most fees will be in the form of an annual fee, interest charges, ATM fees and sometimes application fees or late fees (to name a few – be sure to check out all the fees that come with a card before applying). While some of these fees are unavoidable, fees like interest charges, ATM fees etc. can be avoided if you use your card responsibly. The fees for prepaid cards will depend on the card you choose – some are higher than others. Fees can include activation fees, monthly maintenance fees, ATM withdrawal fees and even inactivity fees. Other prepaid cards are completely free so do your research before getting one of these cards!

Refresh Financial offers one of the best secured cards in the market, with low interest, low fees, and a security deposit as low as $200 (most secured card providers require at least $500). Apply quickly and easily online today!

Prepaid card vs secured credit card: which is the better choice for me?

Ultimately, which card works best for you depends entirely on your financial situation. Both a secured credit card and a prepaid card require funds to be put down. The best option for you comes down to whether you want your card to work for you. If you want to build credit as you use the card, the secured credit card is best, however, if you simply want the spending flexibility of a card when a debit card won’t do, and then a prepaid card will be the best.

Both cards help to control spending and teach responsible spending habits, as well avoiding debt.

What can I do if I have no money to put down?

Unfortunately, if you have poor credit and no money to put down on a credit card, but you’re looking for the spending flexibility of a credit card (i.e being able to buy items on line, and other situations when a debit card doesn’t work) then your credit card options are limited. Nearly all credit cards require either good credit to be able to get an unsecured credit card, or access to funds to put down on a secured card or a prepaid card.

Our recommendation is that you work on building your credit score so that you are not limited in your options in the future.

Refresh Financial has a Cash Secured Savings Loan does just that and requires no money up front.



Leave a Reply

Your email address will not be published. Required fields are marked *


− 4 = 2

    What Canadians are saying about Refresh

    I would like to thank Refresh Financial for helping me get out of a bad spot. I never thought it was possible and almost gave up on things and then I saw Refresh Financial and and gave it a try. At first I was unsure of things but to see my credit score now makes me a believer in this program.

    – Aaron A

    “It hasn’t even been a year yet, possibly only 6-7 months, and my TransUnion score has gone up over 100 points. That was only the tip of the iceberg as recently I was able to get a consolidation loan from my bank that allowed me to move forward and make things easier for me. Talk about second chances!”

    – Angelica M

    “I am now in a position where I am able to obtain credit (just bought a brand-new car and refinanced my mortgage for a fantastic rate) and it took little to no time at all. I would 100% recommend Refresh to anyone looking to rebuild credit with as little hassle as possible.”

    – Cathy M

    “I had not heard of a company doing such a thing before someone suggested it to me and it made sense. I am not very good at saving money and Refresh Financial helped me. I have dealt with them for years now and never had a problem. The customer service is excellent and fast.”

    – Chris C

    Refresh helped me regain credit following a nasty divorce, which left me with a very poor rating. They were able to remarkably help me go from a 480 to a 600 score, in just over a year. Thank you Refresh!”

    – Deb K

    I have watched my credit score jump since being with Refresh and I have already recommended it to friends and family. Thank you for helping me build my credit faster for my future and my children’s future :)”

    – Heather T

    At first I was skeptical because I wasn’t getting funds upfront and had to make payments when I really needed the money. I’ve been in the program a year now and have noticed my credit has improved drastically!”

    – Irene L

    I have been a client of Refresh Financial for approximately 3 years. Since being a client they have improved my credit immensely. Definitely recommend this company to anybody that needs help re-establishing credit.”

    – Jason I

    “I recommend this program to anyone having credit issues. At the end of the agreement, your money is refunded to you. There were times I found myself short on cash and Refresh, with permission, used a portion of my money to clear up my arrears.”

    – Margaret L

    “I would like to thank Refresh Financial for their professionalism, great customer service and for helping get back to a better financial situation. I have always been treated with the utmost respect.”

    – Martine B

    Refresh Financial is an amazing program to help people get back on their feet. I was rock bottom with nowhere to turn. My credit was beyond poor. I would recommend them to anyone. If I can do it surely anyone else can.”

    – Matthew S

    “Great company to deal with for rebuilding credit, very simple process to get started. Good service if you ever have questions.”

    – Mike L

    This business truly cares about its clients. The customer service is always quick to return calls or emails. Their online portal functions very well so as a customer you are always updated as you progress with your loan.

    – Phil J

    “Refresh Financial has made us more aware of how to take care of our financial situation and be more responsible, and making payments on time is rewarding in the end for credit. Thank You sincerely.”

    – Rocky M.

    “Refresh financial is great!!! They boosted my credit score, helped me save money and helped my husband and I buy our house;) I was not only a number to them, they stayed in touch and helped me out along the way. Answered all my questions and concerns.”

    – Sara B

    “Refresh Financial had been exceptionally good to me! I’ve just been out on medical leave and they have accommodated me with my payments without hesitation!! I was in a really bad spot with my credit and they have helped me to try and correct it!! Bravo!”

    – Shannon B

    This company has been nothing but fantastic. They have gone above and beyond to help me. This program has given me the relief and peace of mind I need. I would certainly go back to them and give them names of people who could use this.”

    – Shirley K

    The financial services products are excellent for new immigrants, low-income earners and small business owners. Loans, savings and credit building all in one solution is a perfect fit to help with financial goals and stability.”

    – Soraya H

    “After successfully going through a credit rebuilding loan, I was able to use my built-up equity to purchase a newer vehicle and I have since been approved through a financial institution for a loan.”

    – Tanya W

    “I made some poor credit choices when I turned 18 and have always had this lingering thought of how am I ever going to better my score. Since being with Refresh I have realized that I took the right step towards bettering my future.”

    – Taylor B

    “Thank you Refresh, and my relationship manager for giving me the tools for a better score with a secured card and two credit builder loans. I feel absolutely confident I’m on a better path to financial success. I am happy to be a long term client.”

    – Trevor P

    I’m so excited I’ve joined refresh! I’ve already seen a huge increase on my credit after the first month! The staff are a delight and make this so easy to understand. I strongly recommend Refresh Financial even if you have good credit this will give you a boost and you’re saving money with the reverse loan!”

    – Wayne B