Credit glossary
Secured credit card
A credit card backed by a refundable cash deposit, which usually sets the limit, used mostly to build or rebuild credit.
A secured card works like any other card: monthly statements, required payments and interest on carried balances. If the issuer reports to the bureaus, it builds payment history and utilization the same way an unsecured card does. The deposit comes back when you close the account in good standing or when the issuer graduates you to an unsecured card.
Graduation is worth asking about. When an issuer converts the same account, its open date and payment history keep building, which is better for your credit age than closing it and opening a new card. Small limits make utilization jumpy: a $200 balance on a $300 limit already reads as 67%, so pay before the statement closes to keep the reported figure low.
Guides that go deeper
- Secured credit cards, explained: deposits, limits and reportingHow a secured card's deposit, limit and bill fit together, what scoring models see, how small limits inflate utilization, and how to get your deposit back.
- When a secured card graduates, and how to get yours thereGraduating a secured card can keep its history and return your deposit. How that compares with closing the card, the utilization math, and what to ask.
- How to build credit from nothing, with a month-by-month planNo credit history at all? How a credit file starts, which first account makes sense, when a score appears, and a 12-month plan with the math shown.
Sources
- Building credit from scratch (checklist), Consumer Financial Protection Bureau
- How to Switch Credit Cards, Experian
- When Do Credit Card Companies Report to Credit Bureaus?, Equifax
This is education, not legal or financial advice. Spot an error? Tell us and we'll fix it.