So, what is a secured credit card?  Basically it is a credit card that is extended to you to use, but you have to secure the card with your own funds.  So, if you have a $300 credit limit you would have to pay the credit card company $300 to begin using the card.  What you are showing the company is that you are serious about having a credit card and using it in a responsible way.  The way that the credit card company looks at it is that if you choose not to pay your credit card bill they still have the $300 and they won’t be left with bills that are not paid.

This is not a welcome idea to most people because when you need a credit card it is usually because you need money, so why would you pay someone else to give you a credit limit of the same amount?  The answer is simple: to get back your buying power.  When you have bad credit you do not have the power to buy anything except what you can afford with your own liquid funds.  When you have bad credit it can be difficult to rent a home, buy a home, or even buy a car.  A secured credit card will allow you to sort of wipe the slate clean and show that you are worthy of a lender extending credit to you.

A secured credit card is just a stepping stone and if you look at it in this way you will do much better.  Many people look at the secured credit card as a punishment, but this is not the idea.  The idea is to build a relationship with the credit card company but showing them that you have a stake in this and that you will do well, and then do it.  When you do well with the secured credit card for about 12 months you may find that the company is willing to extend unsecured credit to you, though probably in very limited amounts.  You may only get credit increases of $50 at a time, but it’s a start and if you keep handling things in a responsible way you may find that in three to five years time that you have earned your buying power back and you can even boast a great credit score.  A secured credit card may not be your first choice, but sometimes it is your only choice when you want to obtain credit again.