If you are like millions of Americans, you are dealing with the after-effects of Chapter 7 or Chapter 13 bankruptcy. Plenty of people just like you in Long Island are wondering how to rebuild their credit after declaring bankruptcy, and many outlets like The Balance recommend using secured credit cards for this purpose. It is important to understand what exactly is a secured credit card is and how it can help you rebuild credit.

It is common for people who have a bankruptcy on their credit reports to be denied for traditional credit cards. This is where the secured credit card comes in. A secured credit card requires you to put down a deposit on the card in order to use it. The deposit acts as a security behind the card. Secured credit cards are not the same as a Visa gift card, which functions more like a debit card: when the money put on the card is gone, the card is useless. A gift card will do nothing for your credit, as the card issuer does not report to credit bureaus.

On the other hand, secured credit cards are actual credit cards. Most secured credit card issuers will also report to credit bureaus, so if you make your payments on time this will be reflected on your credit report, thus improving it.

Be aware that you may have a higher interest rate with a secured credit card and there will be no credit limit increases without a further investment in the deposit. But they can be powerful tools if you are hoping to help rebuild your credit after financial disaster.