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Secured Card vs Credit-Builder Loan: Cost Calculator
A secured card and a credit-builder loan are the two most common ways to build credit from scratch — but they cost very different amounts. A secured card's deposit is refundable, so a no-annual-fee card usually costs about $0. A credit-builder loan charges interest and fees you don't get back. This free calculator compares the real dollar cost of each, side by side — no login, no credit pull, and it runs entirely in your browser.
Enter the terms of each option below and see which path costs less — and by how much. Everything is calculated in your browser; nothing is sent anywhere.
Compare the two costs
Secured card
Credit-builder loan
Educational content only — dollar-cost math, not a credit decision, financial advice, or a score prediction. Product terms change; confirm current rates and fees before applying.
Secured card vs credit-builder loan: the real cost
Secured card: a refundable deposit, usually about $0 net
With a secured card you put down a refundable security deposit — often around $200 — and that amount usually becomes your credit limit. The deposit is not a fee and is not spent: it sits there while the account is open and comes back to you when you upgrade or close in good standing. So the only real cost is the annual fee, and many good secured cards have none. The net cost of a no-annual-fee secured card is about $0. Just remember the deposit is locked while the account is open, so do not use money you will need soon.
Credit-builder loan: you pay interest and fees to save
A credit-builder loan works backwards. The lender locks a set amount — say $500 — in a savings account you cannot touch, you make fixed monthly payments over 6 to 24 months, and you get the money back at the end minus interest and any fees. Because it charges interest plus sometimes a one-time admin fee, it is never free: that interest and fee are money you do not get back. The calculator above shows exactly how much, using standard amortization.
A worked example
A no-annual-fee secured card nets about $0 because the deposit comes back. A $500 credit-builder loan repaid over 12 months at a 12% APR costs roughly $33 in interest — so the secured card is about $33 cheaper over that year. Raise the APR, lengthen the term, or add an admin fee and the loan's cost climbs; a card with an annual fee narrows the gap. Run your own numbers in the calculator above.
Cheaper is not automatically better (the honest research)
Cost is only half the decision. In the large CFPB-funded randomized study (Burke, Jamison, Karlan, Mihaly and Zinman; CFPB, 2020), the average effect of a credit-builder loan on credit scores was close to zero. It mainly helped people with no existing installment loan who paid on time, and did little — or even backfired — for those already carrying a loan. About 39% of the people who opened one made at least one late payment on the loan itself, which works against your credit. So the cheaper path is not always the right one: if you already have an installment loan or money is tight, a secured card is usually the safer first move, while a credit-builder loan can make sense if you have a thin file, no installment account yet, and want forced savings.
Frequently asked questions
Is a secured card or a credit-builder loan cheaper?
Usually the secured card. A no-annual-fee secured card's deposit is fully refundable, so its net cost is about $0. A credit-builder loan charges interest and sometimes a one-time fee that you do not get back. Enter your own numbers in the calculator above to see the exact difference for your situation.
Do you get your money back from each one?
From a secured card, yes — the deposit is refundable when you upgrade or close the account in good standing; it is locked, not spent. From a credit-builder loan you get back the amount you saved, but minus the interest and any admin fee, which are real costs.
How is a credit-builder loan's cost calculated?
With standard amortization. Your monthly payment is fixed, part of each payment is interest, and the total interest is what you pay above the amount you get back — plus any one-time admin fee. The calculator above runs the full amortization for the loan amount, term, and APR you enter.
Which one should I choose?
If you already have an installment loan, money is tight, or you just want the lowest-cost start, a no-annual-fee secured card is usually the better first move — it costs about $0 and also lowers your credit utilization. A credit-builder loan can make sense if you have no installment account yet and want forced savings alongside the credit history. Confirm current terms with any provider before signing up.
Does this calculator affect my credit or store my data?
No. It is educational and runs entirely in your browser — no login, no credit pull, and nothing is sent anywhere. It does nothing to your credit and saves none of your numbers.