Secured Credit Card

This is a type of credit card with a credit limit funded by a savings account. To open a secured card account, you deposit money in a special savings account set up by the lender. Your credit limit is the amount of money that you deposit in the account and this limit decreases as you make purchases using the card and increases as you make payments by depositing into the account.

A secured card with the Visa or MasterCard logo eliminates the need to carry as much cash, since you can use it for purchases from any business that accepts those type of credit cards. You can also get cash advances from the account from ATM machines.

Since the bank reports your monthly account payments to the credit bureaus, this type of credit card will help to establish or reestablish revolving credit. Some banks will allow you to convert the card to an unsecured credit card after a certain length of time, provided you have made your monthly payments on time.