It works like this: you deposit $500 into an account and you have “credit” up to $500 on your secured credit card. The beauty of it is that the issuer sends a monthly report to the credit rating agencies saying that you are up to date in your payments. It has proved to be an excellent way of enhancing your credit score after getting a fresh start following bankruptcy.
In a recent survey by New York Times columnist Tara Siegel Bernard, the following banks were determined to be helpful in issuing secured credit cards: HSBS, Capital One, Bank of American (one year following bankruptcy), Wells Fargo (with the one year provision and only to current customers). We don’t have the resources of the Times to check on this, or to find other lenders, however, we have heard that credit unions are good places to check as well.