Secured credit cards – what are your options?

Finance Journalist · 28 September 2021
If you’re looking to build or improve your credit, you might have come across secured credit cards. So what exactly are they?

While being available in the United States and other countries, secured credit cards are not currently offered in Australia. However, you may still be interested in understanding how they work and some alternative ways you could build your credit.

What is a secured credit card?

Secured credit cards require you to provide a security deposit, which is used as collateral for the card. So if you default on your credit card payments, the provider can keep your deposit. The security deposit also typically influences the credit limit you are offered.

Some providers offer refundable deposits. So if you regularly make your payments on time, you may be able to earn back your deposit as a statement credit.

Who are secured credit cards designed for?

Secured credit cards are often taken out by people who are new to credit or want to build their credit history. Because of the required security deposit, secured credit cards may be easier to qualify for compared with traditional unsecured credit cards. Also, it may be possible to improve your credit score with a secured credit card if you use the card responsibly and make payments on time, as the provider will typically report this activity to the credit bureaus.

However, since secured credit cards are designed for people with little credit history or those looking to rebuild their credit, interest rates may be higher than traditional cards. They may also charge higher fees.

Are secured credit cards offered in Australia?

Secured credit cards are not currently offered in Australia. However, they are offered in the United States and other parts of the world.

In Australia, all credit cards are unsecured. This means you do not need to provide a security deposit. If you fail to make your credit card payments, you may be charged late fees. If you fail to make payments over a period of time, the Australian Banking Association notes that your bank may cancel your credit card. Your credit card provider may also send you a default notice and if you are unable to meet the conditions of this notice, it may lodge a statement of claim against you to recover the amount you owe. Late credit card payments can also have a negative affect on your credit score.

What are some alternatives to a secured credit card?

As secured credit cards are not offered in Australia, you might want to consider whether a regular unsecured credit card is the right option for you. Carefully weigh up the pros and cons of having a credit card. If it’s your first time taking out a credit card, you might want to consider a no-frills card with a low or no-interest rate and a low annual fee. You could also explore other products like secured personal loans.

If you have a poor credit score, carefully consider whether applying for a credit product is a good idea for you. If you decide that taking out a credit or loan product is not right for your circumstances, it could be worth considering your debit card options instead.

What are some alternative ways to build your credit score?

Since secured credit cards are not available in Australia, let’s look at some other ways you could build or improve your credit score.

Firstly, it’s important to check your credit score so you know where you currently stand as a borrower. You can check your credit score for free with Canstar.

If you are new to credit products and are looking to build your credit history, you could consider:

  • Putting any utility accounts such as electricity, gas and water bills into your name and ensuring you pay these bills on time.
  • Getting a postpaid phone plan in your name and paying this on time.

If you’re credit score is not as high as you’d like and you want to improve it, consider the following strategies:

  • Ensuring you pay your bills and any existing loans and debts on time. Consider setting up direct debits if you can to help with this.
  • Thinking carefully before applying for new credit or loan products. Each time you apply for a new product it will appear on your credit report. If you make multiple applications in a short amount of time, this may have a negative impact on your score.
  • Getting a copy of your credit report (this is a record of your credit history) from a credit reporting body. In Australia, the main bodies are Equifax, Experian and Illion. Check for any inaccuracies and if you do spot any, see if you can get your report amended.

Read more of our tips on how to improve your credit score.

If you’re currently comparing credit cards, the comparison table below displays some of the low interest credit cards currently available on Canstar’s database for Australians looking to spend around $2,000 per month. Please note that this table features links direct to the provider’s website, and is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Use Canstar’s credit card comparison selector to view a wider range of credit cards.

Cover image source: Julia Bogdan/

Sub edited by Milan Cuk.

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This content was reviewed by Finance and Lifestyle Editor Shay Waraker as part of our fact-checking process.

Tamika covers personal finance for Canstar, specialising in banking and general insurance. She joined the team after completing a Bachelor of Journalism and Bachelor of Laws (Honours) at QUT. She has previously written for a range of news, music and arts publications.

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