Secured and Unsecured Credit Cards Explained
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- čas přidán 24. 07. 2024
- When I got my first credit, I made a very dumb decision that ended up costing me around $3,000, which is a lot of money when your 18 or 19
In this video I’m going to break down, the difference between getting a secured credit card and normal unsecured credit card.
Also going to break down the pros and cons between both of these types of cards could have saved me a ton of money.
Now before I continue to tell you the difference between both of these cards. Unsecured and secured
Remember, you don’t need to get into massive debt to build credit, and you don’t have to pay any interest either when your building credit. ( If someone tells you to have to, then consider that a red flag and they just want you to buy what they are selling)
Example, a car company, might tell you to buy a new car you build credit, its BS you don’t need all that debt.
Secured and Unsecured Credit Cards Explained
The Difference
Secured Credit Cards: Requires a Deposit, which then becomes your spending limit, and more than often, the credit card company doesn’t match it.
Unsecured Credit cards: Do not require a cash deposit, it’s a credit line giving to you by the bank.
Example: This Credit card is Secured, so to get a limit of 800 bucks I had to deposit 800 dollars, and yes you get it back at the end of usually 6month when they ask you if you want to be upgraded.
This credit card is unsecured: So they gave me a credit line by the bank, that was based on my credit score and my financial situation.
Pros unsecured ( normal credit card) My mistakes getting a 3k credit card to build credit
Better offers
Sign up bonus
Free travel
Build credit
Fix credit also
Establish credit
No security deposit
Lower interest rates depending on your credit score
Cons Unsecured (normal credit card)
Poor term if you have bad credit
If you don’t manage it correctly, it could set you bad years with your credit score and debt
Harder to get approved for
Lower limits
Secured Pros | My mom
A credit score doesn’t matter as much
Limit set by the amount of money you have ( with an unsecured they set the limit)
Low deposits, and usually no annual fee
Higher limits depending
Build credit
Fix credit
Establish credit
Cons Secured
Security deposits
Higher interest rate ( which is BS because you have a security deposit, but then again it is a higher risk for the companies, and you still won't pay if you do it correctly)
A low limit on a credit line
Few rewards
Oh, and just get 1 or 2, you don't need 50 cards to build your credit. Also, try to get credit cards you plan on upgrading. For example, you can upgrade from a discover it secured card to a normal discover it card.
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Well I’m 14 and I’m just trying to get ready as soon as possible. I love your videos keep it up 👍🏾
That’s awesome you’re getting started at 14! You’ll be way ahead of everyone else by the time you’re an adult. Have you looked into becoming an authorized user on your parent’s credit card (if they’ll let you??) to start building your credit now??
Hey I saw you posted this 2 years ago. So I'm guessing your 16 rn? What I did when I was 16 is. I went to my parents bank with ny parents and asked to be an authorized user for my parents. Then 2 years later( now) I have a 715 credit score.
STILL TRYING TO PAY OFF MY LAPTOP. I DID EXACTLY WHAT YOU DID AND I LEARNED THE HARD WAY.
Thanks bro this was very helpful for beginners ya just gain a new subscriber 💯
Got you bro 😎
Sorry I’m a lil slow and confused but I need help!! I’m 17 with 0 credit score and my parents recommended me getting Capital one secured but people keep saying that the max is only $500 which I don’t like because I want increases as I get older.. you think i should get the Capital one platinum or Capital one secured??? For a starter!!
💯 nice vid so far
Ayeee thanks bro
I'm glad I see this. Because I'm about too get a credit card so I can build my credit
Step by step
Which credit card did you end up going with?
I love pink too lol... i love Capital One was my first credit card, but i think im doing things wrong with credit cards, i used the all credit and im paying off at next month... people all the time is telling me that i should wait a little bit because paying off all in one shot doesnt help to build your credit score better... what do you think??? How many credit cards do you think is good enough ??? Because i started with one but now i have like ten but the worst experience i had was with petal visa credit card... i really love this video and you have a new follower.
You building credit history, paying it off every month in full is the perfect thing to do. Carrying a balance just helps the banks make more money from you. And how many cards depends on your goals.
@@TommyBryson well thats what i though but ppl says that im doing wrong because i dont wait to be reported what i spent because im paying right after... but im afraid to owns money, what about if i dont have movey? Thats why im paying off , even when i got a car and i have a balance is paid off in couple weeks... and my credit still the same 749 , i dont get it... 😔😔😔
listen to the facts not opinions, your on the right track
Great video. The only critique is that I do not recommend the Capital One Secured card. They lure people in with a partial deposit. However, the card never graduates, so you’ll never get your deposit back unless you close your account. Lots of better secured cards. The best kind are full deposit cards, have rewards and soft graduations (where they graduate the same account without a hard inquiry).
I’ll look into those 😎
Written this previously.....
I’ve done a lot of research on secured credit cards and have developed a comprehensive tier system for them, along with an algorithm for what cards to apply for and in what order.
First, I’ll explain the tiers. My suggestion is open two accounts. Start with the top-tier, then work your way down. Granted, not all cards listed are readily available for everyone, due to military affiliation, bank/credit union membership, or having to apply in person. If the later applies, the option will be null-in-void. If that’s the case, just move on to the next card and/or tier.
Another thing to keep in mind is every card has a minimal deposit. The usual deposit amount is between $200-300. Some minimal security deposits can been as low as $49 for a $200 credit line. The maximum deposits can vary anywhere between $500-$10,000.
Secured Card Tier System:
1. No annual fee; graduates; rewards.
2. Annual fee; rewards
3. No annual fee; graduates.
4. Annual Fee; graduates
5. Local Bank or Credit Union
6. No annual fee; partial deposit allowed; does not graduate; CL increase possible.
7. Annual Fee; does not graduate; but can upgrade to unsecured card with issuer.
8. No credit check; no annual fee; no graduation or upgrade option with issuer.
9. No credit check; annual fee; does not graduate; no upgrade option with issuer.
Examples:
1. Discover, NFCU, SDFCU, H-D VISA
2. TD Bank, BB&T
3. Citi, Bank of America
4. U.S. Bank, Bremer Bank
5. Local Bank or Credit Union
6. Capital One
7. Wells Fargo, Merrick Bank
8. First Latitude
9. OpenSky, GreenDot Platinum
Once you have these cards up and running, I would apply for the following cards to round out your 5-7 base.
1. Secured card #1 (Discover It)
2. Secured card #2 (Citi)
3. Capital One Platinum (apply when Discover graduates)
4. Chase Freedom
5. Bank of America, US Bank, and/or AMEX
Nice, I’ll look into this 😎
@@adgibson82 Hey! My first credit card. Should I get the discover cash back or discover secured
I have several secured credit cards. I think for anyone that wants to hold themselves accountable secured are a good choice because why would you ever pay interest to use your own money
Great point lol
Nice logic I agree
😎
Need help please reply asap, need advice to build credit currently, if I get a secured card its strongly recommended I only use %30 let's say I get $500 CC would I use it to pay loans but be more in debt?
Do you have a way to contact you to help you out?
Why do people even dislike. Like sure this isnt a million dollar explanation but like this gave me the exact knowledge I need to know to tell the difference between a secured and unsecured card
🙌🏼 I agree. He does a great job explaining the difference. But it’s online so haters gonna hate. 🤦♂️
@@AdultingShouldntSuck fax lol
The best way to build credit is to just get a credit card preferably capital one or something small and everytime you use it just pay it back right away do that for two years and your credit score should be in the high 600’s or low 700’s
true but you don’t have to wait two years. I just turned 18 in March and I got 2 credit cards right away and spent only 30% and under on both and I paid it back in full (not minimum payment). After one month my credit went up 696 points.
@@audriahill2197 I know i had a 720 credit score at 19 Now i’m 20 with a 750 score
@@audriahill2197what kind of credit card you got
But what if you got a unsecured credit card and just made small purchases and paid it back every month, wouldn’t that make your credit score jumped??
Yes
Cap one and Navy fed were secure....about 7 months in both turn into unsecured and limits bumped! Got a discover it card now since these graduated
Ayeeee nice 😎😎
Wish I did that when I was 19
@@TommyBryson me too! Lol I ruined my credit at 19....took me a while to get to the point where I actually can get a card lol
Step by step
@@leroyt73 did you keep the navy fed and Capital One cards? Or did you close them out when you got the discover card
I just received a Capital One Platinum Card and my credit score took a 7-point hit because of the hard inquiry
It’s a part of the game, now it’s time to use the card correctly and pay it off every month and build that credit
Yes it will fall out and as long as you pay on time and only utilize 30% of the available it will go up and up
With an u secured credit card how much do you know to spend with that card limit for example if your card has a limit of 300 dollars how much do you spend of that?
Unsecured
For any credit line, 10% utilization is recommended. Never above 30%
I've had this card a little over a year, capital one has given me 2 increases and I was told it will graduate. I pay my balance off completely every month.
Mrs. Kevin Pharaoh what’s your balance now? For my capital one they told me it will not graduate and the highest CL it will reach is 500. I live in Cali btw
@@keysmcbride Just got this notification. 🤔 Started with $200 after paying the $49 deposit, after 5 months $500 and now $1300. Graduated, given back deposit.
If I build my credit with secured cards and its working great for me, why would I then upgrade to the unsecured cards? what are the benefits? does it look better to lenders?
Higher credit line and better deals as far as cash back etc
The higher credit line will help your credit look better. Your “credit utilization rate” should be no more than 30% of your credit limit. So if you have a $1,000 limit, you shouldn’t use more than $300 on that card. Otherwise it looks like you’re living beyond your means and it’ll actually hurt your credit.
@@AdultingShouldntSuck so with a 300 limit I wouldn't want to go pass $90 n should this be a monthly thing?
@@Mary_Marii correct! So if your credit limit is $300, you wouldn’t want to spend more than $90 a month on your credit card and you will want to pay it off in full every month. We suggest putting a reoccurring charge on your credit card, something like a Apple Music, Spotify, Netflix, or some other small monthly payment and then just set up your credit card on automatic payments so you can set it and forget it! Build your credit on autopilot!
@@AdultingShouldntSuck can I pay for my prime membership n when I put that on auto pay I just make sure I put the money back once they take out for auto pay?
I qualified for the discover with no credit score at all
A year later... how would you rate your experience with that card??
@@AdultingShouldntSuck he’s capping 🧢 you need at least 500 or up credit score to get Discover.. don’t believe what other people say without proof👍
@@RonDaG0at hes not lying, i started with discover prior to not having any credit
Quick question, is it better to put more money in a secured rather than putting just $100, will it help build credit faster?
Depends on your credit utilization and if your going to be paying your balance in full every month. The goal is to establish credit and then graduate to a normal credit card and go from their
Sort of like a stepping stone so then you can qualify for good credit cards
TommyBryson yea planning maybe putting up 1k+ on a secured, would utilize almost all and pay it back monthly every time, I just want to build credit quickly and also be able to have a bigger credit limit once I’m able to upgrade to a better cc. But if putting up a bigger deposit won’t increase your credit limit once you can upgrade or better your credit quickly then I’ll put $100.
Step by step
Sounds like a crazy question but if I land a secured cc and have a balance at the end of the month. Instead of paying that balance on time, if I pay half of it before the due date and the other half on time, will that show as two good activities on my credit or just one?
Good for the bank because they’ll charge you interest and not as good for your credit utilization. I recommend paying it in full every month, that means only buying what you can afford
@@TommyBryson pay on the day it's due right?
I have insufficient credit, so I have to put money down to get one. I thought that my credit was bad at first. I just don't have enough credit to get one.
Yeah it’s no big deal, best way would be to get a secured card and go from their, step by step and just use the card for your normal expenses and pay it off every month
@@TommyBryson Honestly I will keep it at $10 a month. Never more then $20. I want to help my mom get investment property. Two people with good credit is better then one.
Big time
I like the cash match back.
I have a secured credit card that has graduated into an unsecured credit card.. which I'm not quite sure what that means...
That’s funny. Despite the discover card being hard to qualify for, that was the only card I was able to qualify for.
Pay the cards in full. No matter which one you have. Better that way.
It’s a lot easier that way! Just set them up to be automatically paid off every month... that was you’ll never forget to make a payment!
I'm trying to build my credit
Did this video help ?
I have all unsecured credit 💳 cards in my wallet. I have four from the credit card companies MasterCard Visa , Discover and American Express. I have few cards and a good score. But I like to watch these channels. Because I always learn something new. And pay them in full
I have an unsecure card
Dave Ramsey plan, no credit card at all.
Ive had both in the past though
What was your experience
Credit around 679 typically. I bought alot of stuff lol... had a secure through credit union. 2 Capital one cards. My experience they both did the same thing really.smaller limit with the secure
I like Dave Ramsey but other people's money is good for leverage as long as you are responsible
Yeah, I think now that you have the experience. You can start to utilize more leverage. Depending on your goals
I didn't have any.
I would probably keep it that way
I have both one and one
Nice 👍 how you been liking it
TommyBryson love them they get me by
bruh just get to the point
Hi, Tommy
i’m Dipto and I’m 19
Years old.
I have 2 credits
First one was American Express
Second one was petal card
That’s pretty solid, are you carrying any balances ?
TommyBryson paid on time and credit score is 729
Sounds good bro, just keep up the good work. What’s your goal with your credit score
I have no Credit at all because I’m 18. I just Applied it for the first progress credit card. And put. The 200. Down hopefully I get approved because I have no Type of credit history it looks Like a great service. I filled out for the one that has $29 annual fee. Not bad. Not trying to paint or 60 $50 annual fee at all But Do you know any credit companies if I don’t get a ApprovedAll I have to do is put 200 down and no annual fee. I don’t mind paying. Don’t spend as much as you don’t got 😤
Discover secured card is the best one
Second
Let’s gooo 😎let me know what you think of the video
TommyBryson watching it right now
😎
Bro, you talk alot to say nothing