Basically just what the title asked
In: Economics
You pay a deposit to the credit card issuer, then they extend you credit for the same amount. For example, you pay $500 deposit, and then get a $500 credit limit. This gives you a chance to use the card and show you can do so responsibly by making payments on time, etc. but it also protects the issuer because you cannot spend more than the amount of money of yours they hold as deposit — if you ran up $500 and tried to bail on the charges, they have your $500.
But using it correctly is a way to establish your credit worthiness and build your credit score, so that you eventually don’t need to have your credit secured and can get larger credit limits, get car loans, home mortgages, etc.
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