Secured Credit Card
CreditGlossary term
Definition
A type of credit card that requires a cash deposit as collateral, which typically becomes your credit limit. Secured cards are designed for people with no credit history or poor credit who want to build or rebuild their scores through responsible use. After demonstrating good payment habits over time, many issuers will upgrade you to an unsecured card and return your deposit.
Related terms
- Credit Builder LoanA small loan specifically designed to help people build or rebuild their credit history, where the borrowed money is held in a savings account while you make payments. As you make on-time payments, the lender reports your positive payment history to the credit bureaus. Once the loan is fully paid off, you receive the funds, having both improved your credit and built savings.
- Credit UtilizationThe percentage of your available credit that you are currently using, calculated by dividing your total credit card balances by your total credit limits. It is one of the most important factors in your credit score, and experts generally recommend keeping it below 30%. Lower credit utilization signals to lenders that you manage credit responsibly and are not overextended.
- Credit LimitThe maximum amount of money a lender allows you to borrow on a credit card or line of credit. Your credit limit is determined by factors such as your income, credit history, and existing debt. Spending close to or above your credit limit can hurt your credit score and may result in over-limit fees.
Get advice that uses your real numbers
Warren reads your accounts and explains what terms like this mean for your plan. Free to start, no credit card required.