Are you looking to establish or rebuild your credit? If so, you'll need the right financial tools to achieve your goal. Good news: A secured credit card can help you establish or re-establish the credit you need. Here's the full scoop on using secured credit cards to build credit.
A secured credit card uses money you place in a security deposit account as collateral. Your credit line is based on your income, ability to pay and the amount of your cash collateral deposit. For example, if you put $1,000 into the deposit account, your available credit line will be $1,000 if you have sufficient income and can demonstrate your ability to pay. (Note that a secured credit card is not the same thing as a prepaid card. Your initial deposit is simply collateral and doesn't count toward payments.) A security deposit gives lenders the confidence that you will pay them back, even if you have damaged credit or no credit history.