How Secured Credit Cards Can Build, or Rebuild, Your Credit

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That may be in part because some features, like the required cash deposit, make the cards hard for some people to use. Often, consumers who are approved for the cards can’t cobble together a deposit, the consumer protection bureau reported.

Also, the low spending limit may make it difficult for people to use the cards in a way that significantly improves their credit score. A major component of credit scores is the proportion of available credit that a person uses. Users of secured cards must keep balances quite low — ideally, 30 percent of the cap — to lift their scores, Mr. Levy said.

Secured cards also usually charge annual fees, and may have higher interest rates than traditional credit cards.

Even so, “the potential market for secured credit cards is huge,” the network found.

Amazon’s card, issued through Synchrony Financial, has no annual fee and offers a wider range of credit limits than most secured cards — as little as $100 or as much as $1,000, according to the company’s website. Credit Builder users may be eligible to move up to an Amazon Store Card after seven months of on-time payments.

The Credit Builder card can be used only at Amazon, making it akin to store cards offered by brick-and-mortar retailers. Its interest rate is a relatively high 28.24 percent. (The average rate on credit cards for people with poor credit was 25.33 percent as of June 5, according to the card site Creditcards.com.)

Amazon Prime members, who pay an annual membership fee, are eligible for 5 percent cash back on purchases with the secured card. But cash-back features tend to encourage spending, which can lead to higher balances and a slower credit score improvement, Mr. Levy said.

Users should be particularly cautious about the card’s special financing promotions, said Odysseas Papadimitriou, chief executive of the personal finance site WalletHub.com.

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