Repairing your damaged credit score and report takes time. There is no magic wand anyone can wave and fix your past mistakes. However, a secured credit card is a legitimate way of assisting in the process.

A secured card requires a cash collateral deposit that becomes the credit line for that account. For example, if you deposit $200 you will be able to charge $200 in merchandise. If you have a little better credit history, you may be able to deposit only a portion of what you would like to charge (deposit $50 and be able to charge $200). And some secured card issuers require that you deposit more money than the credit line that you receive.

You cannot use or withdraw any funds from the security deposit while the secured credit card account is open. The money is a way the credit card company can assure that if you default (don’t pay on your account for several months) they have a way to cover the debt.

Secured credit cards do come with a price. There are fees associated with them like any other credit cards. A survey conducted by Consumer Action from June-November 2011 found that rates vary dependent upon which card you choose.  The average APR was found to be 16.6%, some cards carried a high “maintenance fee”, cash advance fees could be as much as 5% of the amount and a 9.99% interest fee which started on the withdrawal immediately.

Secured credit cards are a great way to start rebuilding your credit, but there are differences. Make sure to read the fine print and shop around for the best one that fits your situation.