Secured Credit Cards Explained

A secured card uses a refundable deposit to set the credit line. It can build history if it reports to the bureaus and you pay on time.

How it works

You provide a cash deposit, often equal to the limit. The deposit is collateral, not a monthly payment fund. You still receive a bill and must pay it.

What to compare

Look for reporting to all three bureaus, no annual fee or a low one, a clear path to graduate to an unsecured card, deposit refund terms, and a grace period. APR matters less if you never carry a balance.

How to use it

Put one small recurring charge on the card, keep autopay on, and avoid using the full limit. A low limit makes utilization spike quickly.

What to avoid

Do not assume approval is guaranteed. Avoid cards with application, monthly, and annual fees stacked together. A debit or prepaid card usually does not build credit because it is not borrowing.