A secured credit card is a credit card backed by a refundable security deposit you provide when you open it. That deposit usually sets your credit limit. Secured cards are designed for people who are building credit for the first time or rebuilding it.
How a secured card works:
- You apply and provide a security deposit — the deposit typically becomes your credit limit.
- You use the card like any other credit card for everyday purchases.
- You pay the bill each month — the deposit is collateral, not your payment.
- Your activity is reported to the credit bureaus, which builds your credit history.
- Used responsibly over time, many secured cards can "graduate" to an unsecured card, and the deposit is returned.
Why it helps build credit: the biggest factors in a credit score are on-time payments and low credit utilization. A secured card, paid on time and kept well below its limit, builds a positive record month after month.
Tips for using a secured card well:
- Pay the full statement balance on time, every month.
- Keep your balance low relative to the limit.
- Use it for small, regular purchases you can comfortably repay.
Secured cards are part of how RMO Credit Builder helps members establish a strong credit foundation.