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Secured cards vs. prepaid cards – what’s the difference?

So you’re ready for a credit card, and you’re exploring your options. You may come across a secured card you’re interested in, but you might be wondering if it’s any different from the prepaid cards you’ve been coming across in your search. It is.

Many people think that secured cards aren’t real credit cards – on the contrary. Secured cards work like any other credit card, except they require security funds as collateral. A prepaid card is just that – a card that you preload with the funds that you plan to spend, kind of like gift cards.

We compare the Capital One Guaranteed Secured Mastercard with prepaid cards below.

Secured cards.

  • A great option if you’re new to credit, or looking to rebuild your credit.

  • Allows you to build your credit score when used responsibly – remember to make at least the minimum payment on time each month but try to spend within your means, because you’re charged interest on any unpaid balance.

  • We report your account activity to credit reporting agencies every month.

  • Comes with an annual fee, as well as other fees.

Prepaid cards.

  • Requires you to preload with the funds you plan to spend.

  • Offers the flexibility of making purchases without having to worry about monthly payments and interest charges.

  • Won’t help you build your credit history because your activity isn’t reported to credit reporting agencies.

  • Gives you the freedom to make purchases until you’ve used up your funds.

  • May come with certain fees like activation and inactivity fees.


If you’re interested in building your credit and you’re in the market for a secured card, check out the Guaranteed Secured Mastercard® from Capital One.

* If Quick Check pre-approves a card, you can be 100% sure we’ll approve your application as long as:

a. There’s been no change in your credit file information, personal information or financial status from the time you receive your Quick Check results to the time you apply for one of our credit cards;

b. You’re at least the age of majority in the province or territory you live in;

c. Your application isn’t flagged for fraud prevention;

d. You don’t have an existing Capital One account; and

e. You haven’t applied for a Capital One account in the last 30 days or had an account with us that was not in good standing in the last year. In good standing means not past due, over limit, fraudulent, restricted, or part of a consumer credit counselling program or bankruptcy.

In some cases, we may not be able to open an account for you even though your application was approved. This can happen if we’re unable to verify your identity, or you don’t provide the required security funds if you’re approved for a Secured Mastercard®.