Secured credit cards are a type of credit card that requires a cash deposit to be made when you open the account. This deposit then acts as collateral every time you make a purchase, and if you fail to make payments on time or default on your debt, your lender can use the deposit to reimburse itself. Here are some key features of secured credit cards:

• They are usually more accessible than other types of credit cards, which is helpful for those with little to no credit history.
• They can be a powerful tool for building and improving credit, provided your lenders report your payment history to the three nationwide consumer reporting agencies.
• They are often used as a stepping-stone to approval for an unsecured credit card.
• They typically have lower credit limits and more fees than unsecured credit cards do.

If youre looking to establish or build credit, a secured credit card can be a great option. Because they are backed by a cash deposit, secured credit cards usually have more lenient approval requirements, making them more accessible to some borrowers than unsecured cards. Once youve improved your credit scores and shown financial institutions you are able to use credit responsibly, you may be able to transition to an unsecured credit card.