A secured credit card looks, feels and works like any other credit card. It has the same purchasing power as any other credit card, with just a few differences.
Significance
Many credit card companies will issue secured and unsecured credit cards. A secured card is held by the customer's upfront deposit, which establishes the credit limit, while an unsecured card has a limit established by your credit history.
Credit Limits
Just like an unsecured Visa or MasterCard, a secured credit card has a limit. While the limit is pre-set, a customer can often select a starting credit limit of $200 to $1,000, depending on the deposit.
Considerations
Secured cards are designed for consumers with poor credit histories or no credit histories, and are used as a tool to help build or rebuild credit. Some cards can transition to an unsecured credit line after a positive payment history ranging from six to 12 months. If a consumer has no late payments in this time, unsecured credit is provided. After a year, the deposit can be returned all together.
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