Secured credit cards are basically credit cards designed for people with bad credit. While secured credit cards are never going to be as rewarding as those rewards credit cards that people with excellent or good credit get to enjoy, they can come in handy especially if you are trying to improve your credit score over time.

First things first, secured credit cards are not prepaid cards in any way. These credit cards work the same way as regular credit cards - they let you make purchases and at the end of the billing cycle, you are required to pay your bills.

The main differences between secured credit cards and regular credit cards are that secured credit cards typically require that you put down a refundable security deposit, of which the amount depends on your creditworthiness.

Also, your credit limit is, well, rather limited. But that's not to say you will be stuck to a low credit limit forever. Depending on your payment history and creditworthiness some time after you've had your secured credit card, you may even qualify to have your credit limit raised! In case you are wondering, secured credit cards also have lower annual fees compared to the regular credit cards on the market.

Just like regular credit cards, secured credit cards are not created equal. Some are no annual fee cards while others may come with a modest annual fee that cardholders have to fork out each year. That said, many of these credit cards do let you receive payment reminder alerts as well as let you check your balance conveniently.

One important thing to note: Your secured credit card should ideally report your monthly payments to the three major credit bureaus. This is crucial if you are looking to build your credit history and/or improve your credit score.

To make sure things are working to your advantage as much as possible, make it a point to always pay your credit card bills in full punctually before their due date. By paying your bills promptly, you avoid high interest rates, penalties and a host of other fees altogether. Keep your account balances below your credit limit, too.

Denise Bay is a staff writer at Email: