With a secured credit card, you make an advance payment against the card’s credit limit, which then works as a credit line for that account. In other words, you deposit a security amount and the card issuer may put it into a savings account bearing interest.
Your deposit amount would stay there until you default on your credit card balance, decide to close the account or become eligible for a regular credit card. With a secured credit card, you can charge an amount equal to your deposit amount. For example, if you have deposited $600, you would be able to charge the secured credit card for amount not exceeding $600. The lesser you charge, the better.
Increasing the credit limit of secured credit card
You can increase your secured credit card’s charging limit by adding more amounts to your deposit account. It often happens that your bank will add more credit to your secured credit card without extra deposits just for the reason that you are making good payments.
Majority secured credit cards would charge you annual fees. The amount of fees differs from issuer to issuer. You should carefully read all details of your prospective secured credit card before applying for it. Some people have found their whole credit limit used up in fees prior to even using their cards.
Converting a secured credit card to regular credit card
To convert your secured credit card to a regular card, you need to make timely payments for a particular amount of time, which varies from issuer to issuer. Most companies would monitor your payment behavior for 12 months before upgrading you to a regular credit card holder, given that you meet all other conditions. If your card issuer does not promote you for a year despite making timely payments, you can still qualify for a regular credit card with other card issuers.