Secured credit cards can be an invaluable resource, especially for people with little or no credit. They also provide an excellent way to build (or rebuild) your credit rating.
With so many purchases requiring credit cards, the secured option can make your life so much easier and are usually much easier to qualify for than traditional credit cards. Online purchases, phone purchases, hotel, airline and car reservations - there are more and more cases when cash simply doesn't get the job done.
Unlike traditional credit cards, secured credit cards requirements are much more lenient since they're secured with collateral in the form of a cash deposit that the cardholder keeps on account.
Issuers of secured credit cards charge an annual and/or activation fee. Additionally, balances not paid off in full are charged interest on a monthly basis the same as traditional cards.
NOTE: If you don't pay off your balance every month, you should be aware of how much you leave outstanding compared to your overall balance. Generally speaking, having no more than 50% of your available credit as an outstanding balance on a card is advantageous to your credit and a good step toward (re)building your credit. Even with all your payments on time, your credit usually take a hit when your outstanding balance vs. available credit exceeds 50% as many lenders and credit reporting agencies classify this as being "credit dependent".
Even with little or no credit, secured credit cards are often attainable and the perfect option to get your credit history on track.
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