Secured credit cards are designed for people building or rebuilding credit. Unlike traditional cards, they require a deposit, often equal to the credit limit. This deposit reduces risk for the issuer but still allows the cardholder to build credit history since activity is reported to bureaus. With responsible use, many issuers will eventually upgrade the account to an unsecured card and return the deposit.

Secured cards are a critical tool for those with poor or no credit history. They offer access to the credit system while providing guardrails. However, they can carry higher fees or lower rewards compared to traditional cards. The main takeaway is that they are stepping stones, not permanent solutions. Properly used, they can open the door to better financial opportunities.