Grace Enfield, Content Writer
Secured credit cards are better than credit-builder loans overall. Both can help you build credit, but secured credit cards are cheaper and easier to find than credit-builder loans and do not force you into debt right away. With a secured credit card, you just have to put down a refundable security deposit before you can begin making purchases.
You can also build credit with a secured card without spending any money, aside from the deposit, which you get back upon closing your account with a $0 balance. With a credit-builder loan, on the other hand, you generally have to make months of payments before you get access to your money.
Secured Credit Cards vs. Credit-Builder Loans
Secured Credit Cards
Easy to get, even with bad credit
Report monthly to credit bureaus
Security deposit required
Credit limit is usually equal to the amount of the deposit
No application fee
Possibility of getting an interest-bearing bank account with the loan
May get some of the interest you paid on the loan back at the end
Takes a long time to get your funds
Not offered by most major banks or credit unions
Don't let you borrow money
There may be a fee to get the loan
Ultimately, either a credit-builder loan or a secured credit card can help you build credit. If you want more options and the ability to make purchases without having cash on hand, you should consider getting a secured credit card. If you don't want to put up a security deposit, a credit-builder loan may be better for you. You can learn more about secured credit cards and credit-builder loans on WalletHub.
Popular Secured Credit CardsCompare Cards
People also ask
Did we answer your question?