Looking for starter plastic? Consider a secured card

Quiz time: How many of you have heard of a secured credit card? Bonus points if you can identify the most unique feature of a secured card.

Secured credit cards are a great way for kids, ages 18 and up, to start building a credit history. I devoted several paragraphs to this in a recent column, which prompted all sorts of questions from readers about how secured cards work, whether there are any drawbacks and where to find the best cards.

Which brings me to the bonus question. Secured credit cards are not all that different from standard plastic except in one big way: To be approved by a card issuer, you are required to provide a security deposit, which you’ll get back if your application is denied.

With many secured cards, be prepared to put up at least $200.

The deposit also “doubles as your credit limit,” said Jill Gonzalez, an analyst with WalletHub. So if you have a $200 deposit, you have a $200 credit limit. If you don’t pay your bill on time, the card company can take the money out of your deposit.

The card company will hold those funds as collateral as long as you hold the account, meaning the risk to the financial institution in approving you as a cardholder is low, Gonzalez said in an email.

If you always pay your bill on time, you’ll get the full security deposit back when you close out the account or move on to an unsecured card that doesn’t require a deposit.

Your kids must be at least 18 to apply for a secured card. Younger teens can start building credit by becoming authorized users on their parents’ credit card.

While some secured cards have annual fees, they are generally less than a normal credit card because of the up-front deposit requirement, according to a WalletHub analysis.

Generally, secured credit card usage is reported to at least one of the three major credit bureaus. On this point, check the fine print on the application. Some secured cards also offer rewards points. To compare fees, rewards, perks and other features, check out websites such as WalletHub, NerdWallet and CreditCards.com.

Be cautious about applying for so-called “partially secured” cards. That means you might be offered more spending power than the deposit you’re required to put down, according to the WalletHub analysis. But the drawback is that it could be tempting to up your limit and take on more debt.

“These are still credit cards and will negatively impact your credit score if you fall behind on payments,” Gonzalez said.