You should apply for a secured credit card if you are facing financial problems and find it difficult to pay your credit card bill on time every month. Secured credit card is suitable for people who have very low credit score or in post bankruptcy situations and have been denied by the credit card companies for new credit card applications. Secured credit card is a credit card but you need to place a deposit before you can use it. If you fail to make the repayment, the credit card company will deduct the deposit that you place with them.

The deposit is refundable on the day you terminate your credit card on the condition that you fully clear your credit card bill every month. Many secured credit cards report to the credit bureau. The amount that is refunded is after the deduction in case you fail to make your repayment on time. The minimum deposit amount for a secured credit card ranges from $50 up to $5,000. Usually, the credit line of the credit card is equal to the amount that you put as deposit. Some credit cards can offer a higher credit line for a lower deposit amount. Just like the regular credit cards,

All payment activities on the secured credit card are usually reported to the three credit bureaus in the USA including Equifax, Experian and TransUnion. This allows you to use the card to build up a credit history so that you can apply for a regular credit card or loan in the future. Without a credit history, no one will approve your loan. This is because you could not produce the income proof. Some secured credit cards may not report to the credit bureaus so you must make sure to check with your credit card company and ensure that the payments to the card are reported to the credit bureau.

Most secured credit cards have an annual fee that ranges from $10 – $30. Many secured credit cards will automatically get upgraded to a regular credit card when you promptly make the repayment for 6 months to 1 year.
The advantage of secured credit card is that you don’t have to undergo any credit check in order to get approved. This can prevent any hard inquiry from your credit report which can result in a significant drop in your credit score.

The majority of the secured credit cards do not offer any rewards program. Secured credit card is ideal for anyone who is not yet earning enough money to take up the responsibility of owning a regular credit card. For example, college students that need some extra pocket money can get a secured credit card to learn how to take up their financial responsibility.