I've heard about "secured" credit cards - where you basically pre-pay the amount of your "credit card" limit - surely your use of this type of card is evident on your credit report, and the advantage of having made your payments wouldn't carry the same weight as it would had you kept up with monthly payments on a regular credit card?

What are the advantages? Do these types of cards exist?

4 Answers 4


Yes these absolutely do exist and in many cases are a VERY good way to help your credit score! The way these cards work is you decide on the balance of the card and give that to the bank/credit union. They then put this money on hold in a savings account in your name and give you a credit card to use. Some places require you to put a little extra for credit cards in case you go over the limit.

You still pay interest on these credit cards and must make your own payments, but this way makes it much less risky to the credit union/bank. These are very simple to get approved for, and especially with kids just turning 18 and are just starting to earn their credit.

Also, these cards do affect your credit card the same as any other credit card. I always suggest paying regularly on this card from 12-18 months and then going back to the credit union/bank to ask to take the hold money off hold.

  • Which credit unions hand out secured-credit-cards? Sep 15, 2011 at 16:11
  • 1
    @f1StudentInUS I had one through Meridian Credit Union when I was living in Toronto, Ontario, Canada.
    – gerrit
    Oct 22, 2015 at 18:10

Yes these types of cards exist. And, yes, they can potentially help you restore your credit.


Secured credit cards are secured by a cash deposit held in a collateral account. Once your secured credit card application is approved, you're required to make a security deposit before you can begin using your card.

If you hold up your end of the bargain and use your card responsibly, this regular reporting could raise your credit score and build your credit report over time. It can help you re-establish your credit. After raising your credit score, you may be able to qualify for a regular credit card.


The only bad thing about these, is I have too many inquiries on my credit, so the bank said it would hurt my credit more to get one more then help it. That is something to think about before acquiring one!

  • Credit inquiries only impact credit score for 12 months, whereas the payment history on the card will have more enduring effects, so I recommend getting the card anyhow unless you have short-term credit goals. Aug 15, 2018 at 15:55

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