What defines a secured credit card?

A secured credit card is fundamentally defined by the requirement of a cash deposit that serves as collateral. This deposit acts as security for the credit line extended to the cardholder, typically equal to the credit limit. The presence of this deposit reduces the risk for the issuing bank, making it a popular option for individuals who may have limited or poor credit history, as it allows them to build or rebuild their creditworthiness.

In contrast, the other options do not accurately represent the characteristics of secured credit cards. For instance, while some secured credit cards may have monthly fees, this is not a defining feature of all secured cards. They can also be available to both individuals and businesses, rather than being exclusively for business use. Additionally, secured credit cards do not provide unlimited borrowing; instead, they have defined credit limits based on the amount of collateral deposited. Thus, the defining element of having a cash deposit as collateral is what accurately distinguishes secured credit cards.