There are several people having a credit rating which is less than satisfactory to apply for a standard credit card. Standard credit cards are given only to those applicants who have a sound credit rating which guarantees the recovery of credit card bills. For those with a bad or credit score, secured credit cards are one of the best options.

The most important difference between standard and secured credit cards is the fact that secured credit cards require collateral in order to be approved. A predetermined amount according to the credit limit which is calculated for a particular applicant has to be paid by the customer as a security deposit to the credit card issuing company.

The security deposit can be in the form of boat, vehicle, stocks and mutual funds, jewelry or any other object that has a monetary value. The concept of a secured credit card is similar to that of house mortgage. In house mortgage, the customer keeps the house as deposit with the bank in return for the required loan amount. Similarly, while purchasing a secured credit card, the customer keeps some kind of security with the bank or financial institution in order to guarantee the repayment of credit. The collateral which is paid as deposit should be at least equal to the amount of credit or more than that.

Secured credit cards can prove to be very helpful for people who are having an unsatisfactory credit rating and are looking towards rebuilding it. These cards have low credit lines in most cases. Besides that, additional charges such as application fees can be taken from the customer. Paying off the bills of your secured credit card on a regular and consistent basis will surely have a positive impact on your credit rating.

Also, while the payments that you make are regular enough, you can even ask your credit card issuer to increase the credit lines along the way. In all other ways, secured credit cards work exactly like the standard ones and provide the customers with all the benefits that are included in standard credit cards.