A secured credit card is 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. The amount that you put down in a deposit will become your credit limit for your credit card. Secured credit cards are usually more accessible than other types of credit cards, which is helpful for those with little to no credit history.

Here are some reasons why you might consider getting a secured credit card:

• Youre looking to establish or build credit. A secured credit card can be a great option for those trying to improve their credit scores or start building a credit history. 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.

• You want to work your way up to an unsecured credit card. Secured credit cards are often used as a stepping-stone to approval for an unsecured credit card. 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.

• You have bad or limited credit. If you have a low credit score that makes it difficult to qualify for an unsecured credit card or other loan, a secured credit card can help you rebuild your credit.

Its important to note that making your monthly payments on time is just as crucial with a secured credit card as with a traditional card. If you default on your payments, the card issuer may keep your deposit. Secured credit cards typically have lower credit limits and more fees than unsecured credit cards do.