What is a secured credit card?

If you have unfavorable credit, you may be asked to apply for a secured credit card from your bank or credit union. To protect the bank against a potential default, they will ask you to deposit money with the bank or institution issuing the credit card. Be informed of the following:

There will be many more fees, such as application, processing and annual fees charged versus an unsecured credit card

The amount that you will have to deposit to secure the card can range from $200 to $5,000.

You cannot withdraw your security deposit as long as you use the card.

Even though you may deposit, $500 as security, the amount that you can charge with your credit card may not equal $500. In some cases, the amount that you can charge may be 50% less ($250) of your deposit.