Answer:
Secured and unsecured credit cards and how they work are very similar to secured and unsecured loans. To open a secured credit card, you must pay a security deposit. This means that if you do not pay back what you spent, the credit company will keep this deposit. It is common for the amount of the deposit to be equal to the limit on a secured card. The security deposit can only be taken back by an individual if they decide to close the line of credit and have paid back the full amount due.
On the other hand, an unsecured credit card is more common. Unsecured credit cards require no deposit to be opened. This means that the line of credit is riskier for the company because there is no guarantee they will get their money back. For this reason, unsecured credit cards will likely have higher interest rates than secured cards.
