If you are just starting to build your credit or if you have bad credit history and are trying to re-build, a Secured Credit Card can help. 

What is a Secured Credit Card?

A secured card requires you to put down a cash deposit that will become the credit line for that account. For example, if you put down a $300 deposit; you can charge up to $300. You can add to the deposit in the future to add more credit.  However, sometimes a bank will reward you for good payment history and add to your credit line without requesting additional deposits.

Where can you get a Secured Credit Card?

Most large banks and almost all credit unions have secured credit cards available to their customers.  Check with your bank or credit union first to find out what kinds of secured credit cards they offer and what fees and interest rates are associated with them. 

If your bank or credit union does not offer Secured Credit Cards, you can check this list of Secured Credit Card Companies.

What’s the Catch?

As with any financial decision you make, you need to do your research and read ALL of the fine print.  There are great companies out there that charge low fees and will treat you well. But watch out for the few really bad companies out there!  There are some that will give you a Secured Credit Card, but require you to pay for an account insurance policy for $50 each month.   

The FTC has organized a crackdown on companies like this, but you still want to be careful. Gather plenty of information before you apply for a card.

What is the Best Way to Use Your Secured Credit Card to Build Your Credit?

Use your new Secured Credit Card to make a few small purchases each month, but NEVER charge more that you can pay off in full!  This is not the kind of card that you want to use to carry a balance.  By making purchases and paying off the balance each month, you will prove your credit worthiness and quickly build your credit!