What is a Secured Credit Card?

A secured credit card is a type of credit card that requires you to put down a security deposit first. That deposit (for example, $300 or $500) usually becomes your credit limit.

You then use the card like a normal credit card—making purchases and payments—and the issuer reports your activity to the credit bureaus. If you pay on time, it can help you build or rebuild your credit history.

If you stop paying, the lender can use your security deposit to cover what you owe, which is why they’re more willing to approve people with low or no credit.

KOHO Essential and Credit Building

If you’re nervous about traditional credit cards but still want to build credit and manage your money better, with KOHO Essential:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Use a prepaid Mastercard® for groceries, bills, subscriptions, and travel.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• You can subscribe to Credit Building for $10/month, it's an affordable way to build your credit history.

• Enjoy unlimited transactions and free e-transfers (never worry about fees when sending money to someone again).

When a Secured Credit Card Makes Sense

A secured card can be useful if you:

• Have no credit history and want to start from scratch

• Have bad credit and have trouble getting approved for regular cards

• Can afford to lock away a deposit for a while

The goal is usually to:

1. Use the card for small, manageable purchases

2. Pay on time and in full every month

3. Build a track record, then eventually move to an unsecured card once your credit improves