The full explanation
You can spend up to that amount and, when you pay the bill, that room becomes available again. Payments are reported to the credit reporting companies, so paying on time helps. As you show you pay on time, your limit may go up and your deposit may be refunded. Fees and interest rates can be high. A prepaid card is different and does not build credit.
An example
Valeria recently arrived in the country and has no credit. Her credit union offers her a secured card: she leaves a deposit, uses it for gas and pays it in full every month.
You will see it in…
- Bank and credit union offers to start your credit
- The cardholder agreement, with fees and interest rate
- Your credit report, where it shows up as a card account
