What It Means
A secured credit card requires a refundable cash security deposit, which typically becomes your credit limit. For example, a $500 deposit gives you a $500 credit limit. Secured cards are designed for people building or rebuilding credit who may not qualify for traditional (unsecured) cards. They work just like regular credit cards - you make purchases, receive a statement, and must make payments by the due date. Payment activity is reported to the credit bureaus, helping you build credit history. After 6-12 months of responsible use, many issuers will upgrade you to an unsecured card and return your deposit. Secured cards are one of the most effective tools for establishing credit from scratch.
Frequently Asked Questions
How does a secured credit card build credit?
Secured cards report to all three credit bureaus just like regular cards. By making on-time payments and keeping utilization low, you build a positive payment history and demonstrate responsible credit use.
How long should you keep a secured credit card?
Plan to use it for 6-12 months before requesting an upgrade to an unsecured card. Some issuers automatically review your account for upgrade eligibility after 6-8 months of positive history.