Secured credit cards are a type of credit card designed to help individuals build or rebuild their credit history. Unlike traditional (unsecured) credit cards, secured cards require a cash deposit as collateral. This deposit minimizes the issuer's risk, making it easier for people with poor or no credit history to qualify.

Key Features of Secured Cards:

Deposit Requirement: An upfront security deposit, typically equal to your desired credit limit, is required. This deposit is refundable if the account is closed in good standing or transitions to an unsecured card.

Credit-Building Tool: Payment activity is reported to major credit bureaus, helping improve credit scores when payments are made on time.

Spending Limits: The credit limit usually matches your deposit but can increase with good payment behavior.

Interest Rates and Fees: Often higher than unsecured cards; look for low-cost options.

Transition to Unsecured Cards: Many issuers offer a path to upgrade after demonstrating responsible usage.

Pros of Secured Cards:

• Accessible approval for individuals with poor credit.
• Credit-building potential with responsible use.
• Controlled spending due to deposit-based limits.
• Refundable deposit upon account closure or upgrade.

Cons of Secured Cards:

• Requires an upfront deposit, which can be a financial barrier.
• High fees and interest rates compared to unsecured cards.
• Limited rewards or cashback programs.

Tips for Using Secured Cards:

• Pay on time to avoid late fees and build a positive credit history.
• Keep credit utilization below 30% to improve your credit score.
• Monitor your credit reports to track progress.
• Upgrade to an unsecured card when your credit improves.