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A secured credit card is basically a training wheel credit card. You may be a young person applying for a credit card. The credit card company may want to know why it should give you a credit card. You have no credit history at all and you are too big of a risk. So what you can do instead is get a secured credit card. You basically put like $500 or $1000 down. Over time, you will charge something and you will pay it off. The credit card company will see you as a trustworthy person. Finally, they will graduate you to an unsecured credit card where you do not have to put money down, but they basically just trust you.

According to CreditNet, an unsecured credit card is a credit card that you could apply for that does not require what they call a deposit. You will get credit limit increases over time. Sometimes you have the ask for credit limit increases, usually around every five or six months. A secured credit card is where you actually have to give the company a deposit. They have to own either a portion of the funds that you will not have access to or they have to get all of it.

Keep in mind there are two different things happening here. You have a deposit and you have a down payment. Down payment means you give the money to the financial entity, and then they are going to give it back to you whether or not you close your account. A deposit means that once you close out the account and you close up the credit card, you will be able to get that full deposit back.