 TITLE: Secured Card or Prepaid Card: Which Is Best For You? CONTENT: What Is a Secured Credit Card?\n------------------------------\nA secured credit card is backed with a refundable security deposit. The biggest advantage of a secured credit card is that card issuers report your payment activity to the three credit bureaus (Experian, TransUnion and Equifax). If you make your payments on time and keep your credit utilization ratio (the portion of available credit you're using) low, you'll build your credit history and likely improve your credit scores.\nSome secured cards also offer users benefits that are available on regular credit cards, such as price protection, rental car insurance and extended warranty coverage. You'll also usually get the same legal protections in case of fraud, such as zero liability on unauthorized charges.\nSecured cards may charge a variety of fees, such as annual fees, application fees or maintenance fees, and they often charge higher interest than other types of credit cards. Make sure you understand and compare terms when you're looking for a secured card, and commit to paying off your balance every month to avoid costly interest charges.\n### How Does a Secured Credit Card Work?\nYou must apply for a secured credit card just like you would any other credit card. Because secured cards are backed by a security deposit, credit issuers are more likely to approve users with a poor credit history than they are with regular unsecured cards.\nOnce approved, you submit a refundable security deposit, which typically serves as your credit limit. So if you deposit $500, that's the amount of credit you are extended for the card. You then use your card for purchases just as you would any other credit card.\nAs with any other credit card, you receive monthly statements and need to make monthly payments. If you don't pay off your balance in full every month, then you will incur interest charges. And if you don't make your payment on time, you'll incur late fees. If you ever default on your payments, your issuer will use the security deposit, and you will forfeit that deposit.\nWhen you can qualify for a standard unsecured card, you can pay off your remaining secured card balance, close your account and receive a refund of your security deposit. Some card issuers will automatically move you to an unsecured card once you've used your card responsibly for a certain amount of time. END