Secured credit cards, in theory, are a tremendously useful product, particularly for financially underserved consumers. But in practice, they’ve been burdened by frictions like clunky onboarding, locked collateral accounts and a stigma that kept many consumers away.
“The product itself was never the problem,” Shankar Pandravada, senior director of product management at Galileo Financial Technologies, told PYMNTS. “The experience was.”
Fast forward to 2026, with more than 45 million Americans considered underserved or underbanked, and financial institutions are now reframing secured credit as a scalable growth strategy tied directly to financial inclusion, customer retention and long-term revenue generation.
“Secured credit is no longer a niche. It’s structural,” Pandravada said. “It solves a real access problem for thin-file, underbanked and credit-rebuilding consumers.”
“Consumers really want three things,” he added. “They want to know how much they can spend, whether their card will work and whether they’re actually building credit.”
Modern secured credit products bundle those functions into a seamless experience that behaves more like debit while preserving the credit-building benefits of revolving accounts.
“The smartest issuers are now treating secured credit as the first rung of a ladder. You start with secured credit, then graduate consumers into higher-value products,” Pandravada said.
Instead of treating secured credit products as isolated risk-management tools, issuers are positioning them as the first stage in a longer customer journey. The shift matters because secured credit is serving as an entry point into broader financial ecosystems.
See also: Secured Credit’s Next Turn: Unlocking Growth With Dynamic Funding
Secured Credit ‘Ladder’ Strategy
That “ladder” strategy reflects a broader realization inside financial services: Consumers who begin with secured products can become highly valuable long-term customers if institutions create a clear path toward unsecured credit and other financial products. For issuers, the model combines reduced underwriting exposure with higher retention and lifetime value.
“It’s all there, real-time balance visibility, modern ledgering, API-driven infrastructure and an experience that ties everything together,” Pandravada said.
Modern ledgering systems, application programming interface (API)-driven banking platforms and dynamic funding capabilities allow customers to maintain a single spendable balance that updates continuously based on deposits and spending activity. This evolution is particularly relevant for gig economy workers and consumers with inconsistent income streams that traditional underwriting models frequently struggle to evaluate appropriately.
“You can clearly see funds coming in, funds going out, in real time,” Pandravada said. “Unlike a traditional credit card where a fixed limit is assigned to you, this limit keeps adjusting based on how the funds are coming in.
“What secured credit competes on is clarity, confidence and progress,” he added. “The progress in building their credit journey.”
Clarity has become especially important as financial institutions compete for younger consumers and gig-economy workers.
Embedded Finance Expands Distribution
The rise of embedded finance is accelerating the opportunities that secured credit represents. Rather than relying solely on banks or card issuers; retailers, marketplaces and neobanks are integrating credit-building tools directly into ecosystems where consumers already spend time.
“They already know who you are,” Pandravada said, describing how neobanks can extend secured credit to existing debit customers without requiring redundant onboarding. “Now they can provide one more product that consumers can use in multiple ecosystems.”
And while Pandravada does not believe secured credit will become a winner-take-all market, he sees success concentrating among companies that can combine trust, real-time infrastructure, risk controls, distribution and intuitive user experience. Each player brings different strengths. Traditional banks contribute regulatory trust and compliance frameworks; FinTechs and neobanks move faster and excel at digital engagement, while retailers and marketplaces own high-frequency customer interactions. At the same time, infrastructure providers like STS Solutions serve as the connective tissue enabling those experiences.
“The differentiating factor is the experience,” Pandravada said. “We provide the hooks and infrastructure, but clients use that to build compelling experiences that matter to their customers.”
For an industry historically focused on premium rewards and affluent cardholders, secured credit’s resurgence represents something different: a technology-enabled push toward scalable financial inclusion. For the dozens of millions of consumers excluded from traditional credit systems, the category’s second act may finally deliver on its original promise.
Watch the full interview with Galileo and STS Solutions’ Shankar Pandravada to hear more about:
- Why secured credit is becoming a scalable growth strategy for banks and FinTechs. Pandravada explains how real-time infrastructure and dynamic funding are helping issuers expand access to more than 45 million underserved Americans while reducing underwriting exposure.
- How embedded finance and modern payments infrastructure are reshaping credit-building products. The conversation explores how API-driven platforms, automated repayments and seamless digital experiences allow consumers to build credit without the friction of traditional secured cards.
- Why customer experience and “credit laddering” may define the next era of secured credit. Pandravada argues that the winning providers will combine simplicity, transparency and automated progression into higher-value financial products to drive long-term loyalty and customer lifetime value.
