It is important to understand that all lenders need to have a way to mitigate risk – whether that's through credit checks, credit limits or requiring some kind of deposit. If they didn't do this, they wouldn't stay in business for long!
What are secured cards?
Secured cards are not very common. They don't usually require a credit check, but you will usually be asked to put down a cash deposit to get one - also known as "security". If you miss payments, the lender will be able to take all or some of the deposit to repay what you owe them.
What are the limitations of a secured credit card?
The details will vary from card to card, but generally with secured cards you won't be able to use any of the deposited funds while your secured credit card account is active. Usually you will get the deposited funds back when you close the account. Your credit limit is normally determined by the amount of the deposit: the more you deposit, the more you can borrow from month to month. With some providers, your credit limit is exactly the same as your deposit, while with others it might be slightly more.
Can a secured credit card help rebuild your credit history?
A secured card can be a good way to rebuild your credit history, but only if you can afford the deposit in the first place. Many also charge annual fees and application fees.
What are unsecured cards?
Most credit cards are unsecured. Simply put, this is a card you can get without putting down any cash or assets as a guarantee or deposit. Instead of asking customers to deposit money up-front, lenders instead check the customers' credit histories to find out if they have a history of borrowing and repaying money reliably.
How can you get an unsecured card?
Normally, you will only be offered an unsecured card if you have a good credit history – but there are some unsecured credit card products available for people with poor credit or with no credit histories too, such as the Vanquis Credit Card.
These cards will usually have a lower credit limit and a higher APR than mainstream unsecured cards, which is how the provider balances the risk of lending without security. When used responsibly, these cards offer a good way to rebuild your credit history over time, and eventually gain access to mainstream credit again.