A secured credit card uses money you place in a security deposit account as collateral. Your credit line is based on your income, ability to pay, and the amount of your cash collateral deposit. For example, if you put $1,000 into the deposit account, your available credit line will be $1,000, assuming you have sufficient income and can demonstrate your ability to pay. (Note that a secured credit card is not the same thing as a prepaid card. Your initial deposit is simply collateral, and doesn't count toward payments.) A security deposit gives lenders the confidence that you will pay them back, even if you have damaged credit or no credit history.