Thinking about applying for a credit card? You might not need to go any farther than your bank or credit union. Depending on the type of card and the financial institution, applying for a bank credit card can be a way to build your credit in a responsible way.

It makes sense to explore the credit cards offered at your banking institution, as well as any advantages to applying for credit at the same place where you stash your cash.

Secured vs. Unsecured Credit Cards

One type of card that people associate with bank credit cards is a secured credit card. A secured credit card may be ideal for customers who may have poor or nonexistent credit. Secured credit cards are backed by collateral, meaning a predetermined amount of funds, that functions as a security deposit for the bank in the event you default on your payments.

The security deposit is usually kept in a savings or checking account and is often equal to your line of credit (so a $2,000 credit line would require a $2,000 deposit). This protects the bank, and it also works to your advantage as a consumer by helping you build up your credit over time until you are eligible for an unsecured, or traditional, credit card.

An unsecured credit card is not backed by collateral, and is what most people think of when they think of a typical credit card.

Banks vs. Credit Unions

Most banks have a credit application on their website and offer a quick decision on your application.

It may be worthwhile to evaluate all the offers available to you from both your bank and other credit card issuers. Banking institutions offer several types of cards, including ones with low APR, no annual fee and even travel rewards. Compare these offers to the ones available through major credit card companies.

Co-branded Credit Cards

It’s worth noting that many credit cards, such as store credit cards offered at major retailers, are considered “co-branded” cards with a partner banking institution. You’ll see the bank’s logo on the card along with that of the retailer or other organization.

In these cases, the bank, rather than the retailer, is likely the responsible party for issuing the card and managing the cardholders’ terms and accounts.

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