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

The main difference between prepaid cards and secured credit cards is that prepaid cards are actually debit cards while secured cards are truly credit cards. Most importantly, that means secured credit cards help cardholders build credit history, while prepaid cards do not.

It’s common to confuse prepaid cards and secured credit cards because your spending with both types of cards is limited to the amount that you have on deposit. In the case of a prepaid card, you load money to the account and then use the card to spend that money. With a secured card, you have to place a refundable security deposit, and the amount you put down becomes your spending limit.

Prepaid vs. Secured Credit Cards

Prepaid cards are often used for budgeting, security (relative to cash), and convenience. Parents can open certain prepaid cards for children of any age, and these cards can be useful for teaching kids and young teenagers about money.

On the other hand, secured credit cards are open to people with bad or limited credit, so they are often used for improving or rebuilding credit scores. You must be 18 or older to be the primary cardholder on a secured card, but some card issuers will allow you to be added as an authorized user at any age.