What is a secured credit card?
A secured credit card works just like a regular credit card, except you put down a refundable security deposit — usually $200 to $500 — that becomes your credit limit. Because the bank holds your deposit as collateral, approval is nearly guaranteed even with collections, charge-offs, or no credit history at all.
Why it is the easiest card to get
With a traditional (unsecured) card, the bank lends you money with nothing backing it. With a secured card, your own deposit backs the line, so the bank takes almost no risk. That is why secured cards approve applicants that every other card rejects.
How to use it to build credit fast
- Keep utilization under 10%. On a $200 limit, that means charging no more than about $20 at a time.
- Pay in full every month. Interest rates on secured cards are high — never carry a balance.
- Never miss a payment. One 30-day late payment can undo six months of progress.
- Confirm it reports to all three bureaus. TransUnion, Equifax, and Experian — a card that reports to only one bureau builds only one file.
Graduating to an unsecured card
Most good secured cards review your account after 6 to 12 months of on-time payments and convert it to a regular card, refunding your deposit. Choose a card with no annual fee (or a very small one) and a clear graduation path.
The Credit Rush can help you clean up the negative items holding your score down while a secured card builds new positive history — the two strategies work best together.