What is a Secure Credit Card?

A secure credit card, also known as a secured credit card, is a type of credit card that requires the cardholder to make a security deposit upfront. The deposit serves as collateral and is used to secure the credit limit on the card. This means that the credit limit on the card is typically equal to or slightly less than the amount of the security deposit.

Secure credit cards are typically used by people who have poor credit or no credit history. They can be a good way to establish or rebuild credit because they report to credit bureaus just like regular credit cards. If the cardholder makes timely payments and uses the card responsibly, it can help improve their credit score over time.

One of the main advantages of a secure credit card is that it can provide a lower risk option for both the card issuer and the cardholder. Since the cardholder has already deposited funds to secure the card, there is less risk of default on the account. This can also make it easier for people with poor credit to qualify for a credit card.