What is a secured credit card?

A secured credit card requires the user to make a deposit against the card's credit limit. The credit limit of the card is either a percentage of the deposit or the full amount of the deposit.

Banks frequently place the deposit into an interest-bearing account, and it remains there until the credit card owner closes his account, upgrades to an unsecured credit card or defaults on the balance. Aside from the deposit, secured credit cards work just like unsecured credit cards, although they may have more fees. A secured credit card is an option for someone who cannot get approved for an unsecured card because he is just starting out with credit or has a poor credit history.