There are definite differences (and similarities) between secured and unsecured credit cards. A secured card is a bank credit card backed by money that you deposit and keep in a bank account, normally an interest earning one that is linked to the credit card company. That account serves as security for the card. (If you don't pay your credit card bill, the money in your account may be used to cover that debt. On the other hand, you may increase your "limit" by increasing the balance in your linked bank account.) This sort of "checks and balances" kind of credit limit may prove to be a side benefit of having a secured card-you cannot overspend. Secured credit card grantors report to the credit bureaus just like the unsecured do, so the payment history will be known by future creditors. And if you are having trouble getting an unsecured card due to past credit problems, you may find the more relaxed requirements on many secured cards can make getting approved much more likely.

Some of the drawbacks to these kinds of cards, though, include high interest rates, low limits (although helping you limit spending, a too-low limit may not be what you need in an emergency), and extra fees for processing the card and for renewing the card yearly. Unsecured cards generally have much lower interest rates, higher spending limits, no fees for processing, and low or no yearly fees for renewal.

And the interest earned from a secured credit card account (from the savings account you normally must open to secure the card) is normally negligible compared to all of the extra fees and higher interest you may have to pay to have the card.