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Question 17

Secured credit cards are often recommended for people who are new to credit or rebuilding their credit history. Unlike traditional cards, secured cards require a refundable security deposit — often equal to the credit limit. For example, a $500 deposit may result in a $500 limit. The deposit protects the issuer in case of nonpayment, but otherwise the card functions like any other: purchases are reported to credit bureaus, interest applies if balances are carried, and payments build credit history. After responsible use, issuers may upgrade the account to an unsecured card and refund the deposit. Secured cards are not meant to be long-term solutions but stepping stones to better credit opportunities.

What makes a secured credit card different from a regular one?

Did You Also Know...

By Wise Wallet

Keeping a small balance doesn’t improve your credit score—on-time payments and low credit utilization do.