Definition
A credit card backed by a refundable cash deposit, which usually sets the credit limit. It works like any card and reports to the credit bureaus, making it the standard tool for building credit from nothing or rebuilding after damage.
Why it matters
Credit history is a chicken-and-egg problem: you need credit to get credit. A secured card breaks the loop with almost no lender risk, and months of on-time payments become a real score.
Example
A recent graduate puts down a $500 deposit for a $500 limit, charges a $40 phone bill each month, and pays in full. The low balance keeps utilization under 10%, and after a year of on-time payments the issuer upgrades the card and refunds the $500.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.