What is a secure credit card backed by?

A secure credit card is backed by a savings account that acts as collateral. This means that the cardholder must deposit a certain amount of money into a savings account, which then serves as security for the credit limit on the card. Typically, the credit limit is equal to the amount deposited. If the cardholder fails to make payments, the issuer can withdraw funds from this savings account to cover any outstanding balance. This structure reduces the risk for the credit card issuer and helps individuals establish or rebuild their credit scores, making it a responsible option for those with limited credit history or past credit challenges.