Credit Cards are a good way to build good credit, however you may not be able to get a credit card without good credit or established credit. Secured credit cards can help people with bad or no credit rebuild and establish credit, but it is important to understand secured credit cards and how they differ from unsecured credit cards.
Secured credit cards are backed by a cash deposit by the customer, this cash deposit is normally equal to credit limit granted by the issuer of the credit card. For example, if you are looking to apply for a $500.00 credit line you will be required to make a $500.00 deposit. The deposit lessens the risk to creditor, making these cards available to those with less than good credit. Customers ask what happens to the deposit made to secure this credit card? This money is still yours and you will get it back, eventually. Ways to insure you get this money back are simple. Pay your bill on time and use the card responsibly. Doing those two things will not just insure that you get your money back but can also allow you to improve your credit enough to qualify for an unsecure credit card or other loans.
Once the deposit is made to the account, the secured credit card works just as an unsecured credit card would. Interest will accumulate if a balance is carried over. Similar to a traditional unsecured card, you will get a monthly billing statement with a due date for the payment. If you owe $250 on your credit limit, the minimum amount due may only be $35. You can, and it is recommended, that you pay the whole balance in full, but you are not required to.
A lot of customers confuse secured credit cards and prepaid debit cards, there is a difference between the two. Both types of card may have a Visa, Mastercard or American Express logo but a prepaid debit card is a bank card. You can only use the card for the amount that is in the attached bank account or prepaid account. You have to make deposits into these accounts to be able to use the card. They are also not reported to the credit reports where a secured credit card should be reported to the credit reporting agencies and you will not receive a monthly billing statement with a payment due.
Many customers have stated that when using their secured credit card responsibly, it took about 6 months to a year to rebuild their credit. In most cases, they have since been approved for traditional unsecured accounts such as other credit cards or loans making the time spent well worth it.
Resource: https://www.nerdwallet.com/article/credit-cards/secured-credit-cards-vs-unsecured-difference