It is not uncommon for individuals who file for bankruptcy to have problems with credit cards. This is why it may surprise you to learn that credit cards can be a cornerstone of a credit rebuilding program. However, if you have poor credit, it is unlikely that a company will give you a traditional credit card. This creates a paradox where the solution to the problem at hand is unattainable.

The solution to this paradox is the secured credit card. According to NerdWallet, secured credit cards require a deposit and allow those recovering from bankruptcy to escape this paradox.

What does having a secured credit card look like?

A secured credit card functions identically to an unsecured credit card, with one major exception. You must put down money on a secured credit card in order for it to function. However much money you put down in this deposit then becomes the maximum limit of the credit card.

In the event that you do not pay your credit card balance, the company will then take the deposit. This is why companies will give secured credit cards to people with low or no credit: there is no risk to the company.

What happens if I use my secured credit card responsibly?

In the event that you keep up with your payments on the secured credit card, your credit will improve. You will be able to get your deposit back once you qualify for unsecured credit cards again. Some secured credit cards even turn into unsecured credit cards after you hit a certain credit score. Secured credit cards are a safe and attainable way for people to rebuild their credit after bankruptcy.