<\/span><\/h3>\n\n\n\nA secured credit card<\/strong> generally requires a refundable cash deposit that serves as security for the account. The deposit may also determine the initial credit limit, depending on the card issuer.<\/p>\n\n\n\nFor example, someone might provide a $500 security deposit and receive a $500 credit limit.<\/p>\n\n\n\n
The card can then be used similarly to a traditional credit card. Monthly payments are still required, and the deposit does not eliminate the responsibility to repay the balance.<\/p>\n\n\n\n
The CFPB identifies secured credit cards as one option for people who want to establish or rebuild a credit history.<\/p>\n\n\n\n
Some secured cards may eventually allow qualified cardholders to graduate to an unsecured account and receive their deposit back, although policies vary by issuer.<\/p>\n\n\n\n
<\/span>Unsecured Credit Cards<\/span><\/h3>\n\n\n\nAn unsecured credit card<\/strong> does not normally require a security deposit.<\/p>\n\n\n\nThese cards are generally easier to obtain when you already have an established credit history, but some issuers offer unsecured cards specifically for consumers with limited or damaged credit.<\/p>\n\n\n\n
When comparing unsecured cards, pay particular attention to annual fees, interest rates, credit limits, and whether the issuer reports account activity to the credit bureaus.<\/p>\n\n\n\n
<\/span>Features to Look for Before Applying<\/span><\/h2>\n\n\n\nFinding the right card requires more than searching for the card with the highest advertised rewards.<\/p>\n\n\n\n
<\/span>1. Low or No Annual Fee<\/span><\/h3>\n\n\n\nIf your primary goal is building credit, paying a large annual fee may not make sense unless the card provides benefits that justify the cost.<\/p>\n\n\n\n
A credit card with no annual fee<\/strong> can be particularly attractive for someone who wants to keep the account open for several years.<\/p>\n\n\n\nKeeping an older account open may contribute to a longer credit history, although the impact of closing an account depends on the overall credit profile.<\/p>\n\n\n\n
<\/span>2. Credit Bureau Reporting<\/span><\/h3>\n\n\n\nBefore applying, verify that the issuer reports account activity to the major credit reporting companies.<\/p>\n\n\n\n
Regularly reported payments can help create a track record of responsible credit management.<\/p>\n\n\n\n
However, reporting policies can vary, so consumers should verify the details directly with the issuer before applying.<\/p>\n\n\n\n
<\/span>3. Reasonable Credit Limit<\/span><\/h3>\n\n\n\nA large credit limit is not always necessary when you’re starting out.<\/p>\n\n\n\n
In fact, a smaller limit can make it easier to control spending.<\/p>\n\n\n\n
For example, someone with a $1,000 credit limit who spends $100 has used 10% of the available limit. Someone who spends $900 has used 90%.<\/p>\n\n\n\n
The second situation can create a much higher credit utilization ratio<\/strong>.<\/p>\n\n\n\n<\/span>4. Clear Fees and Terms<\/span><\/h3>\n\n\n\nAlways review the pricing information before submitting an application.<\/p>\n\n\n\n
Look for:<\/p>\n\n\n\n