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What is a Secured Credit Card?

A secured credit card is a type of credit card that requires a security deposit before it can be used. The deposit acts as collateral for the credit line and is used to cover any unpaid balances or fees if you stop making payments. 

Secured credit cards are often designed to help people who have a bad credit history or no credit history. They are similar to a prepaid card but they require you to make monthly payments

They report to credit bureau, which can help to build your credit score if you make the payments on time or hurt your credit score if you miss or make your payments late.

Even though you make the deposit on a Secured Credit Card you will still have to make the payment on time when the statement comes.  This is how you start building Credit.
  
On Time Payments are Critical
Often if you make your payments on time for six months or a year the secured credit card company will refund you the deposit on your card and give you a credit line.  This will only happen if you make all your payments on this and any other credit you have on time.

My Favorite Secured Credit Card
My favorite Secured Credit Card is the Discover Card.  This card has no annual fee and will even give you one percent cash back on your purchases with your Discover Secure Credit Card.  

If you make payments on time and do not make other credit mistakes they will usually convert your Secure Card to a regular Credit card within a year.  At this point they will refund your Secure Card Deposit and give you a regular Credit Card.

Secured Credit Cards are one of your first steps to building a good credit history.  Check out my Special Note on Secured Credit Cards.  

Also check our getting a Credit Builder Loan and where to get your Credit Score for Free.
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