Secured Credit Cards vs. Debit Cards for Students: Which One Is Right for You?

May 12, 2023
6 min read
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As a student, managing your money wisely is crucial. You might find yourself contemplating between a secured credit card and a debit card. Both cards come with their own set of advantages and disadvantages, and the choice largely depends on your financial goals and needs. This article aims to help you navigate this decision by offering a comprehensive comparison of both options.

Understanding Secured Credit Cards

A secured credit card is a specific type of credit card backed by a cash deposit, which acts as collateral. The deposit typically equals your credit limit. For instance, if you deposit $500, your credit limit would also be $500.

Secured credit cards function like regular credit cards, allowing you to make purchases, withdraw cash, and pay bills. They also accrue interest on any unpaid balances and may come with various fees. The primary benefit of secured credit cards is their ability to help you build or rebuild your credit history. However, they do require an initial deposit, which could limit your available cash for other expenses.

What is a Debit Card?

Debit cards are directly linked to your bank account. The amount you spend or withdraw gets deducted from your account balance.

Debit cards offer a convenient way to access your money without carrying cash or writing checks. They come with benefits like cash-back rewards, fraud protection, and potentially, overdraft protection. The main advantage of a debit card is that it helps you avoid debt and overspending. However, unlike secured credit cards, debit cards don't contribute to building your credit history.

secured credit card for students

Secured Credit Cards vs. Debit Cards: Which One is The Ideal Choice for College Students

Choosing between a secured credit card and a debit card as a college student is a decision influenced by personal circumstances and financial behaviors. Both options cater to different needs and goals. To better guide you in making this important decision, we've outlined several key factors to consider:

Budget Constraints

If you're juggling tuition, rent, and other expenses with a limited income, the risk of overspending is a real concern. Here, a debit card could be your ally. It provides a natural spending limit—your account balance—ensuring you don't spend more than you have. On the other hand, while a secured credit card might offer a higher spending limit, it could tempt you into debt if not managed properly.

Spending Habits

Understanding your spending habits is crucial. If you're prone to impulse purchases or find budgeting challenging, a debit card could act as a natural brake, helping you maintain control over your expenses. Conversely, a secured credit card, although useful for building credit, could lead you into debt if you don't monitor your spending habits closely.

Financial Goals

Mapping out your financial goals can guide your decision. If you're keen on building or improving your credit score, a secured credit card could be your ticket. Timely payments and responsible use can help enhance your credit history. In contrast, a debit card, while excellent for daily spending, won't directly contribute to your credit score.


Both card types score high on convenience, offering easy access to funds, online purchase capabilities, and more. However, many debit cards come with perks such as cashback rewards, mobile banking apps, or free ATM withdrawals. Not all secured credit cards offer such features, so consider what benefits are important to you when making your decision.

Rewarding Your Spending: Cashback and More

An aspect that is often overlooked when comparing debit cards and secured credit cards is the potential for earning rewards. This can add significant value to your everyday spending.

Secured credit cards often shine in this department, frequently offering more generous cashback rewards compared to debit cards. These rewards typically come in the form of a small percentage of your purchases being credited back to your account. Over time, these rewards can accumulate to a substantial amount, effectively saving you money on your expenditures.

To supercharge your cashback rewards, consider linking your secured credit card to cashback apps like Benjamin. There are plenty of cashback apps, so that's why we created a guide how you can maximize you rewards with cashback apps. You can utilize cash back apps to stack their rewards on top of your card rewards. With Benjamin, for example, you could earn additional cashback on top of what you're already earning with your secured credit card on every purchase, and boosted cash back at more than 17,000 restaurants. This strategy can maximize your savings and help you get the most value out of every dollar you spend.

Remember, while earning cashback and other rewards can be a great benefit, it's essential to use your secured credit card responsibly. Always aim to pay off your balance in full each month to avoid interest charges that could offset your rewards.

(If you want to know everything about cashback, you should check this article).

Building Credit in College

A crucial aspect of personal finance for college students is establishing a good credit score. Your credit score is a numerical summary of your ability to manage debt and make timely payments.

As per Credit Karma, the average credit score for college students aged between 18 and 24 stands at 630. While this falls under the 'fair' category, there's ample room for improvement, and some strategic steps can significantly boost this score.

For many college students, the journey of building credit commences with their first credit card, which can be obtained as early as 18 years old, with the support of a co-signer or via a secured card.

Practical Examples of Secured Credit Card

1. Building Credit:

Let's say you're a freshman with a part-time job, and you want to start building your credit. In this case, a secured credit card could be an excellent choice. You deposit a small amount—say, $200—and then make a few small purchases each month, paying your balance in full and on time. Over time, this activity will be reported to the credit bureaus, gradually building your credit score.

2. Avoiding Debt:

If you are worried about overspending and accruing debt, a debit card linked to your checking account might be a better option. It allows you to spend only the money you have and helps control impulsive buying habits. Plus, you can often use digital banking services to keep track of your spending and account balance in real time.

Final Thoughts

The decision between a secured credit card and a debit card boils down to individual financial circumstances, habits, and objectives. A secured credit card can help those looking to build or repair their credit history, while a debit card can aid in avoiding debt and overspending.

For students, who are often taking their first steps into financial independence, the right choice can have a lasting impact on their financial health. Therefore, it's important to consider your spending habits, income, and long-term financial goals before deciding between a secured credit card and a debit card.

Remember, regardless of the card you choose, responsible financial management is key. Stay within your budget, make timely payments, and regularly review your financial habits. To further improve your financial knowledge, check out our top 25 most commonly asked questions about secured credit cards.


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