Secured Credit Cards

If you do not yet have a credit history or you have a poor credit score, a bank will think of you as a riskier loan and may not approve your credit card application. A secured card is designed to help you build a good track record by allowing you to use your own money as protection for the lender.

A secured card requires a cash deposit upfront, usually in the amount of $200 to $500. The deposit serves as a guarantee and is held by the bank in a separate account. Your credit card spending limit is usually tied to the amount you put down as a deposit. Since the bank can keep the deposit if you fail to pay your bill, it does not take on any risk.

Why Secured Cards Are Useful: Secured cards also report to the credit bureaus just like regular credit cards do. Every on-time payment helps you build your credit score.

After 6–12 months of consistent, on-time payments, many banks will automatically upgrade you to an unsecured card and return your original deposit.

How To Use One Correctly: Choose a secured card with no annual fee. Avoid cards that charge monthly maintenance fees. Use the card lightly, pay the balance in full each month, and treat the deposit as an investment in your financial future.