Secured credit cards are issued by banks against fixed deposits (FD). The FD, thus, acts as collateral, unlike in case of other unsecured credit cards where the bank decides one’s credit limit on the basis of the applicant’s salary, credit history and so on.
Spends on credit cards are like short-term loans that have to be paid back to the bank at a given interest rate. Banks usually do not charge this rate if customers pay the outstanding amount in full every month, on or before the due date. A customer’s credit worthiness is judged on the basis of his/her credit score and credit history. Banks have an entire process in place to determine whether an individual should get a credit card or not, how much should the credit limit be and and so on.